The political economy of natural disaster insurance: lessons from the failure of a proposed compulsory insurance scheme in Germany
✍ Scribed by Schwarze, Reimund ;Wagner, Gert G.
- Publisher
- John Wiley and Sons
- Year
- 2007
- Tongue
- English
- Weight
- 338 KB
- Volume
- 17
- Category
- Article
- ISSN
- 0961-0405
- DOI
- 10.1002/eet.456
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✦ Synopsis
Abstract
This paper studies the politico‐economic reasons for the refusal of a proposed compulsory flood insurance scheme in Germany. It provides the rationale for such a scheme and outlines the basic features of a market‐orientated design. The main reasons for the political rejection of this proposal were the misperceived costs of a state guarantee, legal objections against a compulsory insurance, distributional conflicts between the federal government and the German states on the implied administrative costs and the well known charity hazard of ad hoc disaster relief. The focus on pure market solutions proved to be an ineffective strategy for policy advice in this field. Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment.