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Insurance coverage against natural risks: a preliminary analysis

Author

Listed:
  • Annalisa Frigo

    (Bank of Italy)

  • Andrea Venturini

    (Bank of Italy)

Abstract

In light of increased natural risks, this work studies the demand by firms for insurance against the physical risks posed by climate change. This analysis is based on the Invind sample, a survey conducted by the Bank of Italy on a sample of Italian companies in 2021. The questions relating to insurance coverage are cross-referenced with the characteristics of the company and the riskiness of their territory, geolocating the companies' production plants and exploiting the granularity of the climatological maps provided by the Euro-Mediterranean Center on Climate Change and the seismic risk maps of the National Institute of Geophysics and Volcanology. The empirical analysis suggests that exposure to seismic risk is positively associated with the demand for insurance policies against natural and climate damage, with heterogeneous effects on companies operating in industry and services. On the other hand, no evidence emerges that the potential impacts from climate change contribute to demand for insurance.

Suggested Citation

  • Annalisa Frigo & Andrea Venturini, 2024. "Insurance coverage against natural risks: a preliminary analysis," Questioni di Economia e Finanza (Occasional Papers) 830, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_830_24
    as

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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2024-0830/QEF_830_24.pdf
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    References listed on IDEAS

    as
    1. Levon Barseghyan & Francesca Molinari & Ted O'Donoghue & Joshua C. Teitelbaum, 2013. "The Nature of Risk Preferences: Evidence from Insurance Choices," American Economic Review, American Economic Association, vol. 103(6), pages 2499-2529, October.
    2. Rosso, Gianluca & Ricca, Andrea & Chieppa, Alessandro, 2014. "Climate Events and Insurance Demand - The effect of potentially catastrophic events on insurance demand in Italy," MPRA Paper 62903, University Library of Munich, Germany.
    3. Liran Einav & Amy Finkelstein & Mark R. Cullen, 2010. "Estimating Welfare in Insurance Markets Using Variation in Prices," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(3), pages 877-921.
    4. Alessandro Chieppa & Andrea Ricca & Gianluca Rosso, 2014. "Climate Events and Insurance Demand - The effect of potentially catastrophic events on insurance demand in Italy," Papers 1406.4114, arXiv.org.
    5. Benjamin R. Handel, 2013. "Adverse Selection and Inertia in Health Insurance Markets: When Nudging Hurts," American Economic Review, American Economic Association, vol. 103(7), pages 2643-2682, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    insurance; climate; natural disasters;
    All these keywords.

    JEL classification:

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

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