The benefits of introducing a mandatory state hurricane insurance scheme in Florida

Details

Ressource 1Download: BIB_5FCF15D0165B.P001.pdf (252.76 [Ko])
State: Public
Version: author
Serval ID
serval:BIB_5FCF15D0165B
Type
Report: a report published by a school or other institution, usually numbered within a series.
Publication sub-type
Working paper: Working papers contain results presented by the author. Working papers aim to stimulate discussions between scientists with interested parties, they can also be the basis to publish articles in specialized journals
Collection
Publications
Institution
Title
The benefits of introducing a mandatory state hurricane insurance scheme in Florida
Author(s)
von Ungern-Sternberg T.
Institution details
Université de Lausanne - HEC - DEEP
Issued date
10/2009
Number
09.10
Genre
Cahiers de recherches économiques
Language
english
Number of pages
22
Abstract
As a result of its hurricane exposure, Florida is probably the part of the industrialised world most prone to natural catastrophes. Over the last 20 years the Florida legislator has tried to maintain a situation, where the private insurance sector plays a major role in providing hurricane-insurance. Its attempts to keep such insurance affordable have, however, led to a situation, where the public sector still ends up bearing a large part of the risk. Drawing on the experience of various European countries with mandatory state run catastrophe insurance schemes, we argue that the cost of hurricane insurance for the population could be substantially reduced, if Florida created a similar institution. The massive reduction in sales costs, loss adjustment costs and general administrative costs would allow such a system to work with premiums that are on average 25% lower. The problems of adverse selection which plague the current situation would of course (by definition) be eliminated.
Keywords
hurricane insurance, mandatory insurance, regulation, market failure, Florida
Create date
13/08/2013 15:15
Last modification date
21/08/2019 6:09
Usage data