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Insurance Against Extreme Weather Events: An Overview

Kati Kraehnert, Daniel Osberghaus, Christian Hott, Habtemariam Lemlem Teklegiorgis, Wätzold Frank, Hecker Lutz Philip and Svenja Fluhrer
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Habtemariam Lemlem Teklegiorgis: Potsdam Institute for Climate Impact Research (PIK), Member of the Leibniz Association, 14412 Potsdam, Germany
Wätzold Frank: Brandenburg University of Technology Cottbus–Senftenberg, Cottbus, Germany
Hecker Lutz Philip: Brandenburg University of Technology Cottbus–Senftenberg, Cottbus, Germany

Review of Economics, 2021, vol. 72, issue 2, 71-95

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.

Keywords: extreme weather events; insurance; insurance-linked securities; indemnity-based insurance; index-based insurance (search for similar items in EconPapers)
JEL-codes: G22 G52 Q54 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (6)

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DOI: 10.1515/roe-2021-0024

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