Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/299949 
Year of Publication: 
2024
Series/Report no.: 
IZA Discussion Papers No. 17021
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We present a theory of the demand for flood insurance and empirically analyze the effects of the adoption of Risk Rating 2.0, using individual insurance histories for all NFIP policies. The reform increased exit and reduced entry, both in the flood zone and its periphery. The reform had highly heterogeneous effects on insurance costs and triggered adjustments in coverage and deductibles. On average, RR2 increased costs for renewers outside of the flood zone but lowered them for renewers in the flood zone, resulting in an overall average increase. However, the reform reduced revenue and increased financial exposure to flood risk.
Subjects: 
flood risk
insurance
Risk Rating 2.0
FEMA
NFIP
JEL: 
R11
R30
Q54
G22
Document Type: 
Working Paper

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