Uncertainty of Governmental Relief and the Crowding out of Flood Insurance

Raschky, Paul A.; Schwarze, Reimund; Schwindt, Manijeh und Zahn, Ferdinand (2013): Uncertainty of Governmental Relief and the Crowding out of Flood Insurance. In: Environmental and Resource Economics, Vol. 54, No. 2: pp. 179-200

Abstract

This paper discusses the problem of crowding out of insurance by co-existing governmental relief programs—the so-called ‘charity hazard’—in the context of different institutional schemes of governmental disaster relief in Austria and Germany. We test empirically whether an assured partial relief scheme (as in Austria) drives a stronger crowding out of private insurance than a scheme promising full relief which is subject to ad-hoc political decision making (as in Germany). Our general finding is that the institutional design of governmental relief programs significantly affects the demand for private natural hazard insurance.

• Item Type: Journal article
• Faculties: Munich School of Management > Institute for Risk Management and Insurance
• Subjects: 300 Social sciences > 330 Economics
• ISSN: 0924-6460
• Language: English