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Regressivity in Public Natural Hazard Insurance: a Quantitative Analysis of the New Zealand Case

Author

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  • Sally Owen

    (Motu Economic and Public Policy Research)

  • Ilan Noy

    (Victoria University of Wellington)

Abstract

Natural hazard insurance is almost always provided by the public sector (directly, or indirectly through public-private partnerships). Given this dominant role of the public sector in hazard insurance, and the importance of shocks in economic dynamics, it is surprising that equity issues have not faced more scrutiny with respect to the design of hazard insurance. The nature of the regressivity we quantify has not been previously identified. We provide a detailed quantification of the degree of regressivity of the New Zealand earthquake insurance program – a system that was designed with an egalitarian purpose. We measure this regressivity as it manifested in the half a million insurance claims that resulted from the Canterbury earthquakes of 2011. We suggest how this regressivity can be remedied with modifications to the programs’ structure, and point to how other insurance schemes internationally are likely to also be regressive.

Suggested Citation

  • Sally Owen & Ilan Noy, 2019. "Regressivity in Public Natural Hazard Insurance: a Quantitative Analysis of the New Zealand Case," Economics of Disasters and Climate Change, Springer, vol. 3(3), pages 235-255, October.
    • Handle: RePEc:spr:ediscc:v:3:y:2019:i:3:d:10.1007_s41885-019-00043-1
    DOI: 10.1007/s41885-019-00043-1
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    References listed on IDEAS

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    Cited by:

    1. Orkideh Gharehgozli & Peyman Nayebvali & Amir Gharehgozli & Zaman Zamanian, 2020. "Impact of COVID-19 on the Economic Output of the US Outbreak’s Epicenter," Economics of Disasters and Climate Change, Springer, vol. 4(3), pages 561-573, October.
    2. Kevin T. Smiley & Ilan Noy & Michael F. Wehner & Dave Frame & Christopher C. Sampson & Oliver E. J. Wing, 2022. "Social inequalities in climate change-attributed impacts of Hurricane Harvey," Nature Communications, Nature, vol. 13(1), pages 1-10, December.
    3. Stéphane Hallegatte & Adrien Vogt-Schilb & Julie Rozenberg & Mook Bangalore & Chloé Beaudet, 2020. "From Poverty to Disaster and Back: a Review of the Literature," Economics of Disasters and Climate Change, Springer, vol. 4(1), pages 223-247, April.
    4. Owen Sally & Noy Ilan & Pástor-Paz Jacob & Fleming David, 2021. "Measuring the Impact of Insurance on Recovery after Extreme Weather Events Using Nightlights," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 15(2), pages 169-199, July.
    5. Cuong Nguyen & Ilan Noy & Dag Einar Sommervoll & Fang Yao, 2020. "Redrawing of a Housing Market: Insurance Payouts and Housing Market Recovery in the Wake of the Christchurch Earthquake of 2011," CESifo Working Paper Series 8560, CESifo.
    6. Jacob Pastor-Paz & Ilan Noy & Isabelle Sin & Abha Sood & David Fleming-Munoz & Sally Owen, 2020. "Projecting the effect of climate change-induced increases in extreme rainfall on residential property damages: A case study from New Zealand," Working Papers 20_02, Motu Economic and Public Policy Research.
    7. Cuong Nguyen & Ilan Noy & Dag Einar Sommervoll & Fang Yao, 2023. "Settling insurance claims with cash or repair and housing market recovery after an earthquake," Economics of Disasters and Climate Change, Springer, vol. 7(1), pages 117-134, March.

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    More about this item

    Keywords

    Earthquake; Tax regressivity; Insurance;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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