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Why Do Few Homeowners Insure Against Natural Catastrophe Losses?

Author

Listed:
  • Antwi-Boasiako Benjamin Addai

    (Dresden Leibniz Graduate School (DLGS), Leibniz Institute of Ecological and Regional Development (IOER), Faculty of Environmental Studies, Technische Universität Dresden, Germany)

Abstract

Insurance has been suggested as a policy instrument that can help in managing the rising economic cost of natural catastrophes. Evidence, however, shows that many homeowners do not insure their homes against natural catastrophes and tend to depend on (unreliable) disaster aid. This paper surveys the economics, insurance and psychology literature to explain why few homeowners insure against natural catastrophes. The paper covers the relevant theoretical approaches as well as the available empirical evidence and possible policy measures.

Suggested Citation

  • Antwi-Boasiako Benjamin Addai, 2014. "Why Do Few Homeowners Insure Against Natural Catastrophe Losses?," Review of Economics, De Gruyter, vol. 65(3), pages 217-240, December.
    • Handle: RePEc:lus:reveco:v:65:y:2014:i:3:p:217-240
    DOI: 10.1515/roe-2014-0302
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    Citations

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    Cited by:

    1. Hangsuck Lee & Minha Lee & Jimin Hong, 2024. "Optimal insurance for repetitive natural disasters under moral hazard," Journal of Economics, Springer, vol. 143(3), pages 247-277, December.
    2. Michael Berlemann & Joel Methorst & Marcel Thum, 2022. "20 Jahre nach dem großen Hochwasser – Gefährdete Gemeinden für Einwohner attraktiver," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 29(04), pages 03-06, August.
    3. Daniel Osberghaus & Christian Groß & Gert G. Wagner & Frank Offermann & Christoph Duden & Jonas Schmitt & Michael Berlemann & Jörg Asmussen & Markus Roth & Lamia Messari-Becker & Nicola Garbarino & Ben, 2021. "Extremwetterereignisse: Staatshilfe oder private Vorsorge – wer trägt die Kosten?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 74(11), pages 03-28, November.
    4. Michael Berlemann & Max Steinhardt & Jascha Tutt, 2015. "Do Natural Disasters Stimulate Individual Saving? Evidence from a Natural Experiment in a Highly Developed Country," SOEPpapers on Multidisciplinary Panel Data Research 763, DIW Berlin, The German Socio-Economic Panel (SOEP).
    5. Berlemann, Michael & Methorst, Joel & Thum, Marcel, 2023. "Do floods scare off residents?," Economics Letters, Elsevier, vol. 222(C).
    6. Berlemann, Michael & Haustein, Erik & Steinhardt, Max Friedrich & Tutt, Jascha, 2024. "Do natural disasters affect household saving? Evidence from the August 2002 flood in Germany," Discussion Papers 2024/4, Free University Berlin, School of Business & Economics.

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