The Benefits of Uniform Flood Insurance
Grislain-Letrémy, Céline; Lemoyne de Forges, Sabine (2015), The Benefits of Uniform Flood Insurance, Geneva Risk and Insurance Review, 40, 1, p. 41-64. http://dx.doi.org/10.1057/grir.2014.14
TypeArticle accepté pour publication ou publié
Journal nameGeneva Risk and Insurance Review
MetadataShow full item record
Abstract (EN)Prevention policies against flood, such as dams or levees, are commonly designed by local jurisdictions and for most, they exert externalities on neighbouring jurisdictions. We study a model in which each jurisdiction chooses its collective prevention effort depending on the flood risk and on the insurance system that covers its inhabitants. As compulsory uniform insurance depends on all insureds' risk, it enables partial integration of prevention externalities by jurisdictions. We determine under which conditions compulsory uniform insurance Pareto dominates risk-rated insurance.
Subjects / KeywordsFlood; insurance; collective prevention; interjurisdictional externalities
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