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At War with the WeatherManaging Large-Scale Risks in a New Era of Catastrophes$
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Howard C. Kunreuther and Erwann O. Michel-Kerjan

Print publication date: 2009

Print ISBN-13: 9780262012829

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262012829.001.0001

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A Multistate Empirical Analysis of Homeowners’ Insurance

A Multistate Empirical Analysis of Homeowners’ Insurance

Chapter:
(p.202) (p.203) 10 A Multistate Empirical Analysis of Homeowners’ Insurance
Source:
At War with the Weather
Author(s):

Howard C. Kunreuther

Erwann O. Michel-Kerjan

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262012829.003.0010

The homeowner must choose the best insurance coverage offered in the market. The lowest prices are generally offered by “preferred insurers,” or insurers with more stringent underwriting standards, whereas the highest prices are offered by “standard” and “nonstandard” insurers. This chapter examines the supply and demand for homeowners’ insurance in the United States and discusses within-feature changes (for example, various deductible levels) and across-features trade-offs (such as deductible levels versus type of coverage). It shows that demand for insurance is more or less unit elastic at the county level. Insurance premiums are higher in Florida, Texas, and South Carolina than in New York. The chapter concludes with an analysis of the impact of various interventions, including price controls and residual market mechanisms, on the market.

Keywords:   insurance coverage, supply and demand, homeowners’ insurance, insurance premiums, Florida, Texas, South Carolina, New York, price controls, residual market mechanisms

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