The decision to insure against forest fire risk: an econometric analysis combining hypothetical real data

Marielle Brunette (), Stéphane Couture, J. Foncel () and Serge Garcia
Additional contact information
J. Foncel: University of Lille, LEM-CNRS

The Geneva Papers on Risk and Insurance - Issues and Practice, 2020, vol. 45, issue 1, No 6, 133 pages

Abstract: Abstract Storm and fire are the two main natural hazards in Europe. They result in high costs for forest owners. However, behaviour in terms of forest insurance demand is heterogenous across Europe. In this paper we focus on private forest owners’ decisions to insure against fire. We collected data on: i) willingness-to-pay (WTP) for insurance based on hypothetical scenarios incorporating ambiguous risks; ii) real data on insurance decisions and the individual characteristics. We simultaneously estimated real insurance and WTP using a selection equation for zero WTP that we explain by protest responses against insurance under expected utility. We found that real insurance provision is relevant to explaining positive WTP and that unobservable determinants of insurance may explain protest responses. These results confirm the interest in including observed decisions to analyse preferences towards insurance. One additional result is that facing ambiguous risk increases the WTP for insurance.

Keywords: Insurance decision; Willingness-to-pay; Ambiguity; Protest response; Corner solution; Forest fire (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1057/s41288-019-00146-6 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
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:pal:gpprii:v:45:y:2020:i:1:d:10.1057_s41288-019-00146-6

Ordering information: This journal article can be ordered from
http://www.springer.com/finance/journal/41288/PS2

DOI: 10.1057/s41288-019-00146-6

Access Statistics for this article

The Geneva Papers on Risk and Insurance - Issues and Practice is currently edited by Christophe Courbage

More articles in The Geneva Papers on Risk and Insurance - Issues and Practice from Palgrave Macmillan, The Geneva Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().