Private versus Public Flood Insurance: Differences in Premiums and Uptake Observed in Two Coastal Housing Markets Using Survey Data
Date
2025-01-01
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Marine Resource Economics
Abstract
Using a natural experiment created by the 1982 Coastal Barrier Resources Act (CBRA), we measure the extent to which insurance premiums vary between private and publicly backed flood insurance policies. The CBRA resulted in homeowners living in neighboring housing markets in which some have access to the federally backed National Flood Insurance Program (NFIP) and others do not. Flood risks and other features of the neighborhoods are otherwise indistinguishable. Those without access to publicly backed insurance must purchase private insurance if they desire coverage. We compare insurance premiums and uptake in the two markets and find that premiums for private coverage are significantly higher than public rates (after controlling for other factors in a reduced-form regression), implying a subsidy by NFIP. We also find a much lower uptake of insurance in the areas without federally backed insurance. Our results are based on a mail survey of residents in two US coastal communities with a 50% response rate: North Bethany Beach, Delaware, and North Topsail Beach, North Carolina. We also present results related to perceptions of flood hazards, of being under- or overinsured, and measures taken to mitigate flood damage.
Description
This article was originally published in Marine Resource Economics. The version of record is available at: https://doi.org/10.1086/732848.
© 2024 MRE Foundation, Inc. All rights reserved. Published by The University of Chicago Press on behalf of the MRE Foundation.
This article will be embargoed until 01/01/2026.
Keywords
economics, flood, insurance, NFIP, premiums, subsidy, sustainable cities and communities, climate action
Citation
Fielding, Samuel, and George Parsons. “Private versus Public Flood Insurance: Differences in Premiums and Uptake Observed in Two Coastal Housing Markets Using Survey Data.” Marine Resource Economics 40, no. 1 (January 1, 2025): 1–22. https://doi.org/10.1086/732848.