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Abandoning disaster relief and stimulating insurance demand through premium subsidies

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  • Tim Philippi
  • Jörg Schiller

Abstract

Premium subsidies can be used to address low demand for natural hazard insurance when it is partly caused by governmental disaster relief payments. We analyze how the introduction of ex ante premium subsidies affects the frost insurance demand of German winegrowers after the government changed insurance regimes to avoid ex post disaster relief payments. We find that the implementation of a premium subsidy in an immature market with low levels of participation, presumably caused by strong anticipation of disaster relief, is effective in increasing overall frost insurance demand. Receiving disaster relief payments 3 years before the introduction of the subsidy seems to make farmers more responsive toward the premium subsidy.

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  • Tim Philippi & Jörg Schiller, 2024. "Abandoning disaster relief and stimulating insurance demand through premium subsidies," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 91(2), pages 339-382, June.
    • Handle: RePEc:bla:jrinsu:v:91:y:2024:i:2:p:339-382
    DOI: 10.1111/jori.12467
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    Cited by:

    1. Alejandro H. Drexler & Ralf Meisenzahl, 2024. "Special issue on climate change and natural disasters," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 91(2), pages 255-261, June.

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