Risk Communication and Decision-Making Lab Notes

How Insurance Companies Influence Households’ Flood Insurance Choices

Households face a high-stakes problem in selecting an insurance contract. How much coverage should they buy? What deductible should they choose? The household must weigh premiums paid today against losses from an unlikely – but possibly catastrophic – future event such as a flood. Often, the household has never experienced the insured event and may know little about its likelihood.…Read More

Local Solutions to Flood Insurance Affordability: Portland’s Flood Insurance Savings Program

In a new issue brief, we examine Portland’s Flood Insurance Savings Program in detail, discussing its structure, participants, and impact on flood insurance premiums. We also identify lessons learned that may be useful to other communities struggling with flood insurance affordability and to policymakers considering NFIP reform.…Read More

The 3 Maps That Explain Residential Flood Insurance Purchases

While take-up rates in many parts of the country remain low for flood insurance, there are places where many households are insured and, surprisingly, places where most flood insurance is purchased outside of the FEMA-mapped high-risk areas. We offer three findings about residential NFIP purchases as demonstrated in three maps.…Read More

Oregon Improves Agent Knowledge of Flood Insurance

For many people, their insurance agent is the person they turn to for advice on flood insurance. But many insurance agents do not understand flood insurance either. Last month, Oregon became the fifth state in the country to try and improve insurance agent understanding about flood insurance by creating a flood-specific continuing education requirement. …Read More

Flood Risk Beliefs and Coastal Home Prices

How does coastal flood risk impact home prices? The answer depends, in part, on how buyers and sellers perceive flood risk. In a recent NBER working paper, Laura Bakkensen and Lint Barrage examine the potential impact of heterogeneous beliefs about flood risk on housing market price dynamics, given a hypothetical increase in flood risk. …Read More

The Importance of Accurate Flood Hazard Maps and Risk-Based Premiums

In a recent study, the Risk Center’s Howard Kunreuther and Marilyn Montgomery calculate structure-specific, risk-based flood insurance premiums for nearly 12,000 North Carolina homes and compare them to current NFIP rates. Their findings underscore the importance of developing accurate flood hazard maps to price insurance effectively and communicate flood risk. …Read More

Concentration of Policies in the NFIP

The National Flood Insurance Program (NFIP) is the predominant provider of flood insurance nationally.  Communities across the country can voluntarily join the program. In exchange for their residents being able to purchase federal flood policies, they must adopt minimum floodplain management regulations.  The program has grown since its founding in 1968 and now writes nearly 5 million policies throughout the U.S. These policies, however, are not distributed evenly geographically: the NFIP is a highly concentrated program.…Read More