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Flood Insurance and Claims: The Impact of the Community Rating System

Eugene Frimpong, Daniel Petrolia (), Ardian Harri and John H. Cartwright

Applied Economic Perspectives and Policy, 2020, vol. 42, issue 2, 245-262

Abstract: The Community Rating System (CRS) was introduced to encourage community‐level flood mitigation and increase household‐level flood insurance uptake through the National Flood Insurance Program (NFIP). Using historical data of policies‐in‐force and flood damage claims from 1998–2014 for all NFIP communities in Alabama and Mississippi, we estimate the relationship between community participation in the CRS and the number of policies‐in‐force, as well on flood damage claims. We find a significant, positive, and generally increasing effect of CRS participation on insurance uptake. Reduced flood damage claims are found to be limited to communities with a very high level of CRS participation (Class 5) only.

Date: 2020
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Handle: RePEc:wly:apecpp:v:42:y:2020:i:2:p:245-262