Regressivity in Public Natural Hazard Insurance: a Quantitative Analysis of the New Zealand Case

Sally Owen and Ilan Noy
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Sally Owen: Motu Economic and Public Policy Research

Economics of Disasters and Climate Change, 2019, vol. 3, issue 3, No 3, 235-255

Abstract: Abstract Natural hazard insurance is almost always provided by the public sector (directly, or indirectly through public-private partnerships). Given this dominant role of the public sector in hazard insurance, and the importance of shocks in economic dynamics, it is surprising that equity issues have not faced more scrutiny with respect to the design of hazard insurance. The nature of the regressivity we quantify has not been previously identified. We provide a detailed quantification of the degree of regressivity of the New Zealand earthquake insurance program – a system that was designed with an egalitarian purpose. We measure this regressivity as it manifested in the half a million insurance claims that resulted from the Canterbury earthquakes of 2011. We suggest how this regressivity can be remedied with modifications to the programs’ structure, and point to how other insurance schemes internationally are likely to also be regressive.

Keywords: Earthquake; Tax regressivity; Insurance (search for similar items in EconPapers)
JEL-codes: Q54 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (8)

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DOI: 10.1007/s41885-019-00043-1

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