IDEAS home Printed from https://ideas.repec.org/p/lau/crdeep/09.10.html
   My bibliography  Save this paper

The benefits of introducing a mandatory state hurricane insurance scheme in Florida

Author

Listed:
  • Thomas von Ungern-Sternberg

Abstract

As a result of its hurricane exposure, Florida is probably the part of the industrialised world most prone to natural catastrophes. Over the last 20 years the Florida legislator has tried to maintain a situation, where the private insurance sector plays a major role in providing hurricane-insurance. Its attempts to keep such insurance affordable have, however, led to a situation, where the public sector still ends up bearing a large part of the risk. Drawing on the experience of various European countries with mandatory state run catastrophe insurance schemes, we argue that the cost of hurricane insurance for the population could be substantially reduced, if Florida created a similar institution. The massive reduction in sales costs, loss adjustment costs and general administrative costs would allow such a system to work with premiums that are on average 25% lower. The problems of adverse selection which plague the current situation would of course (by definition) be eliminated.

Suggested Citation

  • Thomas von Ungern-Sternberg, 2009. "The benefits of introducing a mandatory state hurricane insurance scheme in Florida," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 09.10, Université de Lausanne, Faculté des HEC, DEEP.
  • Handle: RePEc:lau:crdeep:09.10
    as

    Download full text from publisher

    File URL: http://www.hec.unil.ch/deep/textes/09.10.pdf
    Download Restriction: no

    More about this item

    Keywords

    hurricane insurance; mandatory insurance; regulation; market failure; Florida;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L88 - Industrial Organization - - Industry Studies: Services - - - Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lau:crdeep:09.10. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gaëlle Sarda). General contact details of provider: http://edirc.repec.org/data/deelsch.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.