The Pricing of Flood Insurance
| Autor: | Brett Lingle, Carolyn Kousky, Leonard A. Shabman |
|---|---|
| Rok vydání: | 2017 |
| Předmět: |
021110 strategic
defence & security studies Actuarial science 010504 meteorology & atmospheric sciences media_common.quotation_subject 0211 other engineering and technologies Sample (statistics) 02 engineering and technology 01 natural sciences law.invention Incentive National Flood Insurance Program Hurricane katrina Calculator law Debt Flood insurance Business 0105 earth and related environmental sciences media_common |
| Zdroj: | Journal of Extreme Events. :1750001 |
| ISSN: | 2382-6339 2345-7376 |
| Popis: | Despite the availability of flood insurance in the US through the National Flood Insurance Program (NFIP), many homeowners at risk of floods are not insured. The program went deeply into debt after Hurricane Katrina in 2005 and Congress adopted multiple reforms to NFIP rate setting in 2012 and 2014. In response to the ongoing concern about the cost of NFIP policies, as well as multiple misunderstandings about NFIP rates, we simulate NFIP premiums for a sample of homes by constructing a premium calculator based on FEMA rating tables. These simulations highlight several aspects of NFIP rating in need of more attention. First, there are many implicit and explicit cross-subsidies in NFIP pricing, potentially distorting risk information and incentives. Second, NFIP rating is complicated, which can make it difficult for homeowners and untrained agents to evaluate options. Finally, the premiums we present offer insight into the ongoing debate about affordability of flood insurance by highlighting where policies cost the most. FEMA is actively exploring rate reform, which may address some of these concerns. |
| Databáze: | OpenAIRE |
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