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Measuring the Impact of Insurance on Urban Recovery with Light: The 2010-2011 New Zealand Earthquakes

Cuong Nguyen and Ilan Noy ()

No 7031, CESifo Working Paper Series from CESifo Group Munich

Abstract: We measure the longer-term effect of a major earthquake on the local economy, using night-time light intensity measured from space, and investigate whether insurance claim payments for damaged residential property affected the local recovery process. We focus on the destructive Canterbury Earthquake Sequence (CES) 2010 -2011 as our case study. Uniquely for this event, more than 95% of residential housing units were covered by insurance, but insurance payments were staggered over 5 years, enabling us to identify their local impact. We find that night-time luminosity can capture the process of recovery and describe the recovery’s determinants. We also find that insurance payments contributed significantly to the process of economic recovery after the earthquake, but delayed payments were less affective and cash settlement of claims were more effective than insurance-managed repairs in contributing to local recovery.

Keywords: earthquake; recovery; disaster; insurance; light (search for similar items in EconPapers)
JEL-codes: G22 Q54 R11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ias and nep-ure
Date: 2018
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