The Unfortunate Regressivity of Public Natural Hazard Insurance: A Quantitative Analysis of a New Zealand Case

24 Pages Posted: 21 Jul 2017

See all articles by Sally Owen

Sally Owen

Victoria University of Wellington - School of Economics and Finance; Climate Sigma

Ilan Noy

Victoria University of Wellington

Date Written: June 29, 2017

Abstract

Natural hazard insurance is almost always provided through public-private partnerships. Given the dominant role of the public sector, it is surprising that equity issues have not faced more scrutiny with respect to the design of hazard insurance. 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. As in other cases, this can be remedied with modifications to the program’s structure.

Keywords: insurance, redistribution, regressivity, tax

JEL Classification: D300

Suggested Citation

Owen, Sally and Noy, Ilan, The Unfortunate Regressivity of Public Natural Hazard Insurance: A Quantitative Analysis of a New Zealand Case (June 29, 2017). CESifo Working Paper Series No. 6540, Available at SSRN: https://ssrn.com/abstract=3005165

Sally Owen

Victoria University of Wellington - School of Economics and Finance ( email )

PO Box 600
Wellington, 6140
New Zealand

Climate Sigma ( email )

19 Summit Apartments
184 Molesworth Street
Wellington
New Zealand

Ilan Noy (Contact Author)

Victoria University of Wellington ( email )

P.O. Box 600
Wellington, 6140
New Zealand

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