Disaster Aid, Insurance, and Fairness: Household and Firm Perceptions of Flood Policy in Germany

Nicola Garbarino, Sascha Möhrle, Florian Neumeier and Marie-Theres von Schickfus

No 74, EconPol Policy Brief from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: Key Messages• At the EU level, underinsurance is widespread and poses fiscal risks. The debate in Germany reflects a broader need for insurance-based climate adaptation mechanisms.• Public expectations of government flood aid in Germany are surprisingly low – putting common concerns of moral hazard and “charity hazard” into perspective.• When informed about generous past aid, households – especially uninsured ones in low-risk areas – show significantly more support for mandatory flood insurance.• This change is driven by fairness concerns rather than self-interest or beliefs about overall efficiency.• Overall, firms also have low aid expectations. Support for insurance increases or decreases depending on prior aid expectations and current insurance status.

Date: 2025
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