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Uncertainty of Governmental Relief and the Crowding out of Flood Insurance

Paul Raschky (), Reimund Schwarze, Manijeh Schwindt () and Ferdinand Zahn ()

Environmental & Resource Economics, 2013, vol. 54, issue 2, 179-200

Abstract: This paper discusses the problem of crowding out of insurance by co-existing governmental relief programs—the so-called ‘charity hazard’—in the context of different institutional schemes of governmental disaster relief in Austria and Germany. We test empirically whether an assured partial relief scheme (as in Austria) drives a stronger crowding out of private insurance than a scheme promising full relief which is subject to ad-hoc political decision making (as in Germany). Our general finding is that the institutional design of governmental relief programs significantly affects the demand for private natural hazard insurance. Copyright Springer Science+Business Media B.V. 2013

Keywords: Insurance demand; Governmental relief; Natural hazards; D78; D81; G22; Q54 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1007/s10640-012-9586-y

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