Insurance Market Response to Flood Hazards: Empirical Evidence from the Housing Market
||Pommeranz, Carolin; Bertram I. Steininger
||Insurance Market Response to Flood Hazards: Empirical Evidence from the Housing Market
||23rd Annual European Real Estate Society Conference in Regensburg, Germany
||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.
Post discussion ...
||Urban Economics & Planning
These pages are best viewed with any standards compliant browser (e.g. Mozilla).