Natural Disasters: Exposure and Underinsurance

Forthcoming, Annals of Economics and Statistics

35 Pages Posted: 4 Jul 2014 Last revised: 7 Feb 2017

See all articles by Céline Grislain-Letrémy

Céline Grislain-Letrémy

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); Université Paris Dauphine; Ministry of Health

Date Written: January 30, 2017

Abstract

The insurance coverage for natural disasters remains low in many exposed areas, particularly in Latin America and the Caribbean. Reduced availability or unaffordability of insurance are commonly identified as the primary causes for this low insurance coverage. The French overseas departments provide a rare example of a well-developed and regulated supply of natural disaster insurance. They offer an exceptional opportunity to analyze the demandside determinants of insurance coverage in these highly exposed regions. Based on unique household-level micro-data, I estimate a structural model of insurance supply and demand. Because my data set combines detailed information on both insured and uninsured households, I can analyze the extensive margin in the insurance market, that is, the insurance take-up. I show that the low insurance take-up rate in the French overseas departments is mainly due to uninsurable housing and the anticipation of assistance.

Keywords: natural disasters, insurance, disaster aid

JEL Classification: Q54, G22, H84, D12

Suggested Citation

Grislain-Letrémy, Céline, Natural Disasters: Exposure and Underinsurance (January 30, 2017). Forthcoming, Annals of Economics and Statistics. Available at SSRN: https://ssrn.com/abstract=2461822 or http://dx.doi.org/10.2139/ssrn.2461822

Céline Grislain-Letrémy (Contact Author)

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Université Paris Dauphine ( email )

Place du Maréchal de Lattre de Tassigny
Paris, Cedex 16, 75775
France

Ministry of Health ( email )

Ouagadougou
Mali

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