Risk Selection and Moral Hazard in Natural Disaster Insurance Markets: Empirical evidence from Germany and the United States
نویسندگان
چکیده
Adverse selection and moral hazard are commonly expected to cause market failures in natural disaster insurance markets. However, such problems may not arise if individuals mainly buy insurance based on risk preferences. Advantageous selection can occur if individuals with insurance are highly risk averse and seek to reduce risk. We offer a comprehensive empirical study of risk selection in natural disaster insurance markets and whether disaster preparedness activities differ when people have natural disaster coverage. Statistical analyses are based on survey data of individual disaster insurance purchases and risk mitigation activities in Germany and the United States. Consistent results are obtained in both countries supporting advantageous selection. This has significant potential public policy relevance regarding the effectiveness of their respective existing market structures for natural disaster insurance.
منابع مشابه
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