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Insurability and Mitigation of Flood Losses in Private Households in Germany

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  • Annegret H. Thieken
  • Theresia Petrow
  • Heidi Kreibich
  • Bruno Merz

Abstract

In Germany, flood insurance is provided by private insurers as a supplement to building or contents insurance. This article presents the results of a survey of insurance companies with regard to eligibility conditions for flood insurance changes after August 2002, when a severe flood caused 1.8 billion euro of insured losses in the Elbe and the Danube catchment areas, and the general role of insurance in flood risk management in Germany. Besides insurance coverage, governmental funding and public donations played an important role in loss compensation after the August 2002 flood. Therefore, this article also analyzes flood loss compensation, risk awareness, and mitigation in insured and uninsured private households. Insured households received loss compensation earlier. They also showed slightly better risk awareness and mitigation strategies. Appropriate incentives should be combined with flood insurance in order to strengthen future private flood loss mitigation. However, there is some evidence that the surveyed insurance companies do little to encourage precautionary measures. To overcome this problem, flood hazards and mitigation strategies should be better communicated to both insurance companies and property owners.

Suggested Citation

  • Annegret H. Thieken & Theresia Petrow & Heidi Kreibich & Bruno Merz, 2006. "Insurability and Mitigation of Flood Losses in Private Households in Germany," Risk Analysis, John Wiley & Sons, vol. 26(2), pages 383-395, April.
    • Handle: RePEc:wly:riskan:v:26:y:2006:i:2:p:383-395
    DOI: 10.1111/j.1539-6924.2006.00741.x
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    1. Susanne Hanger & Joanne Linnerooth‐Bayer & Swenja Surminski & Cristina Nenciu‐Posner & Anna Lorant & Radu Ionescu & Anthony Patt, 2018. "Insurance, Public Assistance, and Household Flood Risk Reduction: A Comparative Study of Austria, England, and Romania," Risk Analysis, John Wiley & Sons, vol. 38(4), pages 680-693, April.
    2. Tianzhuo Liu & Huifang Jiao, 2018. "Insights into the Effects of Cognitive Factors and Risk Attitudes on Fire Risk Mitigation Behavior," Computational Economics, Springer;Society for Computational Economics, vol. 52(4), pages 1213-1232, December.
    3. W. J. W. Botzen & J. C. J. M. Van Den Bergh, 2008. "Insurance Against Climate Change and Flooding in the Netherlands: Present, Future, and Comparison with Other Countries," Risk Analysis, John Wiley & Sons, vol. 28(2), pages 413-426, April.
    4. Osberghaus, Daniel, 2015. "The determinants of private flood mitigation measures in Germany — Evidence from a nationwide survey," Ecological Economics, Elsevier, vol. 110(C), pages 36-50.
    5. Yilin Zou & Alexia Stock & Rachel Davidson & Linda Nozick & Joseph Trainor & Jamie Kruse, 2020. "Perceived attributes of hurricane-related retrofits and their effect on household adoption," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 104(1), pages 201-224, October.
    6. Ewa Lechowska, 2022. "Approaches in research on flood risk perception and their importance in flood risk management: a review," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 111(3), pages 2343-2378, April.
    7. Teun Terpstra & Michael K. Lindell & Jan M. Gutteling, 2009. "Does Communicating (Flood) Risk Affect (Flood) Risk Perceptions? Results of a Quasi‐Experimental Study," Risk Analysis, John Wiley & Sons, vol. 29(8), pages 1141-1155, August.
    8. Paul Hudson & Annegret H. Thieken, 2022. "The presence of moral hazard regarding flood insurance and German private businesses," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 112(2), pages 1295-1319, June.
    9. Chiradip Chatterjee & Pallab Mozumder, 2014. "Understanding Household Preferences for Hurricane Risk Mitigation Information: Evidence from Survey Responses," Risk Analysis, John Wiley & Sons, vol. 34(6), pages 984-996, June.
    10. Michael Siegrist & Heinz Gutscher, 2008. "Natural Hazards and Motivation for Mitigation Behavior: People Cannot Predict the Affect Evoked by a Severe Flood," Risk Analysis, John Wiley & Sons, vol. 28(3), pages 771-778, June.
    11. Wim Kellens & Ruud Zaalberg & Philippe De Maeyer, 2012. "The Informed Society: An Analysis of the Public's Information‐Seeking Behavior Regarding Coastal Flood Risks," Risk Analysis, John Wiley & Sons, vol. 32(8), pages 1369-1381, August.
    12. Cristóbal De La Maza & Alex Davis & Cleotilde Gonzalez & Inês Azevedo, 2019. "Understanding Cumulative Risk Perception from Judgments and Choices: An Application to Flood Risks," Risk Analysis, John Wiley & Sons, vol. 39(2), pages 488-504, February.
    13. Asadul Islam & C. Matthew Leister & Minhaj Mahmud & Paul A. Raschky, 2020. "Natural disaster and risk-sharing behavior: Evidence from rural Bangladesh," Journal of Risk and Uncertainty, Springer, vol. 61(1), pages 67-99, August.
    14. Paul O'Hare & Iain White & Angela Connelly, 2016. "Insurance as maladaptation: Resilience and the ‘business as usual’ paradox," Environment and Planning C, , vol. 34(6), pages 1175-1193, September.
    15. Peter John Robinson & W. J. Wouter Botzen & Fujin Zhou, 2021. "An experimental study of charity hazard: The effect of risky and ambiguous government compensation on flood insurance demand," Journal of Risk and Uncertainty, Springer, vol. 63(3), pages 275-318, December.
    16. Dingde Xu & Yi Liu & Xin Deng & Chen Qing & Linmei Zhuang & Zhuolin Yong & Kai Huang, 2019. "Earthquake Disaster Risk Perception Process Model for Rural Households: A Pilot Study from Southwestern China," IJERPH, MDPI, vol. 16(22), pages 1-18, November.
    17. Toon Haer & W. J. Wouter Botzen & Hans de Moel & Jeroen C. J. H. Aerts, 2017. "Integrating Household Risk Mitigation Behavior in Flood Risk Analysis: An Agent‐Based Model Approach," Risk Analysis, John Wiley & Sons, vol. 37(10), pages 1977-1992, October.
    18. Philip Bubeck & W. J. Wouter Botzen & Jonas Laudan & Jeroen C.J.H. Aerts & Annegret H. Thieken, 2018. "Insights into Flood‐Coping Appraisals of Protection Motivation Theory: Empirical Evidence from Germany and France," Risk Analysis, John Wiley & Sons, vol. 38(6), pages 1239-1257, June.
    19. W. J. Wouter Botzen & Howard Kunreuther & Erwann Michel-Kerjan, 2019. "Protecting against disaster risks: Why insurance and prevention may be complements," Journal of Risk and Uncertainty, Springer, vol. 59(2), pages 151-169, October.
    20. P. Bubeck & W. J. W. Botzen & J. C. J. H. Aerts, 2012. "A Review of Risk Perceptions and Other Factors that Influence Flood Mitigation Behavior," Risk Analysis, John Wiley & Sons, vol. 32(9), pages 1481-1495, September.
    21. Joseph T. Ripberger & Hank C. Jenkins‐Smith & Carol L. Silva & Jeffrey Czajkowski & Howard Kunreuther & Kevin M. Simmons, 2018. "Tornado Damage Mitigation: Homeowner Support for Enhanced Building Codes in Oklahoma," Risk Analysis, John Wiley & Sons, vol. 38(11), pages 2300-2317, November.
    22. Mol, Jantsje M. & Botzen, W.J. Wouter & Blasch, Julia E., 2020. "Behavioral motivations for self-insurance under different disaster risk insurance schemes," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 967-991.
    23. Erwann O. Michel-Kerjan, 2010. "Catastrophe Economics: The National Flood Insurance Program," Journal of Economic Perspectives, American Economic Association, vol. 24(4), pages 165-186, Fall.
    24. W. J. Wouter Botzen & Jeroen C. J. M. Van Den Bergh, 2012. "Monetary Valuation Of Insurance Against Flood Risk Under Climate Change," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(3), pages 1005-1026, August.
    25. Wim Kellens & Teun Terpstra & Philippe De Maeyer, 2013. "Perception and Communication of Flood Risks: A Systematic Review of Empirical Research," Risk Analysis, John Wiley & Sons, vol. 33(1), pages 24-49, January.

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