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Insurance Against Extreme Weather Events: An Overview

Author

Listed:
  • Kraehnert Kati
  • Habtemariam Lemlem Teklegiorgis
  • Fluhrer Svenja

    (Potsdam Institute for Climate Impact Research (PIK), Member of the Leibniz Association, 14412Potsdam, Germany)

  • Osberghaus Daniel

    (ZEW – Leibniz Centre for European Economic Research, Mannheim, Germany)

  • Hott Christian

    (Helmut Schmidt University, Hamburg, Germany)

  • Wätzold Frank
  • Hecker Lutz Philip

    (Brandenburg University of Technology Cottbus–Senftenberg, Cottbus, Germany)

Abstract

Extreme weather events increasingly threaten the economic situation of households and enterprises around the world. Insurance against extreme weather events is among the climate change adaptation instruments that are currently discussed by the policy community. This overview paper provides a synopsis of the state of research on insurance against extreme weather events, outlining advantages and limitations inherent in three main types of insurance: indemnity-based insurance, index-based insurance, and insurance-linked securities. The paper discusses issues related to insurance uptake, distributional effects, misleading incentives and potentially negative side effects, as well as the role of the state.

Suggested Citation

  • Kraehnert Kati & Habtemariam Lemlem Teklegiorgis & Fluhrer Svenja & Osberghaus Daniel & Hott Christian & Wätzold Frank & Hecker Lutz Philip, 2021. "Insurance Against Extreme Weather Events: An Overview," Review of Economics, De Gruyter, vol. 72(2), pages 71-95, August.
    • Handle: RePEc:lus:reveco:v:72:y:2021:i:2:p:71-95:n:2
    DOI: 10.1515/roe-2021-0024
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    Citations

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    Cited by:

    1. Michael Berlemann & Joel Methorst & Marcel Thum, 2022. "20 Jahre nach dem großen Hochwasser – Gefährdete Gemeinden für Einwohner attraktiver," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 29(04), pages 03-06, August.
    2. Belinda Storey & Sally Owen & Christian Zammit & Ilan Noy, 2022. "Insurance Retreat in Residential Properties from Future Sea Level Rise in Aotearoa New Zealand," CESifo Working Paper Series 10017, CESifo.
    3. Liu, Tongxin & Shao, Jianfang & Wang, Xihui, 2022. "Funding allocations for disaster preparation considering catastrophe insurance," Socio-Economic Planning Sciences, Elsevier, vol. 84(C).

    More about this item

    Keywords

    extreme weather events; insurance; insurance-linked securities; indemnity-based insurance; index-based insurance; G22; G52; Q54;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G52 - Financial Economics - - Household Finance - - - Insurance
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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