The Demand for Index-Based Flood Insurance in a High-Income Country

Martin Achtnicht and Daniel Osberghaus

German Economic Review, 2019, vol. 20, issue 2, 217-242

Abstract: Increased flooding is expected to be one of the greatest threats caused by climate change. Flood insurance helps to cope with the risk of flooding, but take-up rates are relatively low in many places. Mainly in developing countries, index-based flood insurance - where the insurer’s payout is based on pre-agreed weather indices instead of actual loss - has been marketed recently. In this paper, we investigate whether the introduction of index-based flood insurance with relatively low premiums is likely to attract new customers in a high-income country, namely Germany. We use data from a discrete choice experiment combined with damage data for a major flood in 2013. We find index-based flood insurance to attract similar customers as traditional damage-based, while the latter is preferred on average. Our results suggest that not many new customers would enter the market, once index-based flood insurance were available.

Keywords: Adaptation; choice experiment; climate change; flood insurance; flood risk; index-based insurance (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1111/geer.12142 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
Journal Article: The Demand for Index‐Based Flood Insurance in a High‐Income Country (2019)
Working Paper: The demand for index-based flood insurance in a high-income country (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:germec:v:20:y:2019:i:2:p:217-242

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/ger/html

DOI: 10.1111/geer.12142

Access Statistics for this article

German Economic Review is currently edited by Peter Egger, Almut Balleer, Jesus Crespo-Cuaresma, Mario Larch, Aderonke Osikominu and Georg Wamser

More articles in German Economic Review from De Gruyter
Bibliographic data for series maintained by Peter Golla ().