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Come Rain or Shine: Evidence on Flood Insurance Purchases in Florida

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  • Erwann Michel-Kerjan

    (The Wharton School - University of Pennsylvania, X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris)

  • Carolyn Kousky

    (Resources for the Future)

Abstract

In the U.S., flood insurance is provided essentially through the National Flood Insurance Program (NFIP), a public-private program established in 1968. In the past 10 years, the program has radically expanded to cover $1.1 trillion in assets today. This paper provides a detailed analysis of the largest flood insurance sample ever studied by focusing on the state of Florida, which accounts for 40 percent of the entire NFIP portfolio. We study the demand for flood insurance with a database of more than 7.5 million flood policies-in-force for the years 2000-2005, and all the claims filed in Florida during that period. We answer four questions: What are the characteristics of the buyers of flood insurance? What types of contracts (deductibles and coverage levels) are purchased? Where and when are claims paid and to what extent does mitigation work? How are prices determined and how much does NFIP insurance cost? Given the recent significant increase in the cost of catastrophes worldwide and the debate about the role that insurance can play to enhance adaptation to climate change, the responses to these questions shall be of interest to other countries too.

Suggested Citation

  • Erwann Michel-Kerjan & Carolyn Kousky, 2009. "Come Rain or Shine: Evidence on Flood Insurance Purchases in Florida," Working Papers hal-00372387, HAL.
    • Handle: RePEc:hal:wpaper:hal-00372387
    Note: View the original document on HAL open archive server: https://hal.science/hal-00372387
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    References listed on IDEAS

    as
    1. Browne, Mark J & Hoyt, Robert E, 2000. "The Demand for Flood Insurance: Empirical Evidence," Journal of Risk and Uncertainty, Springer, vol. 20(3), pages 291-306, May.
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