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Paper eres2016_195:
Insurance Market Response to Flood Hazards: Empirical Evidence from the Housing Market

id eres2016_195
authors Pommeranz, Carolin; Bertram I. Steininger
year 2016
title Insurance Market Response to Flood Hazards: Empirical Evidence from the Housing Market
source 23rd Annual European Real Estate Society Conference in Regensburg, Germany
summary Higher property losses due to flooding events represent an increasing challenge to the global insurance sector. This study aims at identifying the impact of flood hazard location on property prices and evaluates the flood risk perception of potential homeowners. We utilize insurance-based geographical information system (GIS) data for flood zone identification and residential property offering records from Dresden, Germany to run a spatial Durbin model. Results indicate that homeowners are almost informed about costs for sufficient flood insurance coverage and premiums are capitalized into the residential property market since location within a flood risk area lowers offering prices for houses by 26%. However, for condominiums within a flood-prone area the price discount is only 3%. Furthermore, price discounts exceed capitalized insurance premiums due to non-monetary losses that cannot be covered by insurance.
series ERES:conference
type paper session
discussion No discussions. Post discussion ...
ratings
session Urban Economics & Planning
last changed 2017/11/18 16:16
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