Measuring the Impact of Insurance on Urban Recovery with Light: The 2010-2011 New Zealand Earthquakes

48 Pages Posted: 16 Jul 2018

See all articles by Nguyen Van Cuong

Nguyen Van Cuong

University of Victoria - Faculty of Law

Ilan Noy

Victoria University of Wellington

Date Written: May 14, 2018

Abstract

We measure the longer-term effect of a major earthquake on the local economy, using night-time light intensity measured from space, and investigate whether insurance claim payments for damaged residential property affected the local recovery process. We focus on the destructive Canterbury Earthquake Sequence (CES) 2010 -2011 as our case study. Uniquely for this event, more than 95% of residential housing units were covered by insurance, but insurance payments were staggered over 5 years, enabling us to identify their local impact. We find that night-time luminosity can capture the process of recovery and describe the recovery’s determinants. We also find that insurance payments contributed significantly to the process of economic recovery after the earthquake, but delayed payments were less affective and cash settlement of claims were more effective than insurance-managed repairs in contributing to local recovery.

Keywords: earthquake, recovery, disaster, insurance, light

JEL Classification: G220, Q540, R110

Suggested Citation

Cuong, Nguyen Van and Noy, Ilan, Measuring the Impact of Insurance on Urban Recovery with Light: The 2010-2011 New Zealand Earthquakes (May 14, 2018). CESifo Working Paper Series No. 7031, Available at SSRN: https://ssrn.com/abstract=3206627

Nguyen Van Cuong (Contact Author)

University of Victoria - Faculty of Law ( email )

PO Box 2300, STN CSC
McGill at Ring Rds (Fraser Bldg)
Victoria, British Columbia V8W 3B1
Canada

Ilan Noy

Victoria University of Wellington ( email )

P.O. Box 600
Wellington, 6140
New Zealand

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