Researchers from University of York Report Details of New Studies and Findings in the Area of Earth Science (The Presence of Moral Hazard Regarding Flood Insurance and German Private Businesses): Science – Earth Science

2022 FEB 28 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Investigators publish new report on Science - Earth Science. According to news reporting originating in York, United Kingdom, by NewsRx journalists, research stated, “There is a movement towards the concepts of integrated flood risk management and governance. In these concepts, each stakeholder prone to flooding is tasked with actively limiting flood impacts.”

The news reporters obtained a quote from the research from the University of York, “Currently, relatively more research has focused upon the adaptation of private households and not on private businesses operating in flood-prone areas. This paper offers an extension of this literature on business-level flood adaptation by exploring the potential presence of moral hazard. The analyses are based on survey data collected in the aftermath of six floods across Germany between 2002 and 2013 to provide a first indication of the presence of moral hazard in private businesses. Moral hazard is where increased insurance coverage results in policyholders preparing less, increasing the risk they face, a counterproductive outcome. We present an initial study of moral hazard occurring through three channels: the performance of emergency measures during a flood, changes in precautionary behavior employed before a given flood occurred, and changes in the intention to employ additional precautionary measures after a flood. We find, much like for private households, no strong indication that moral hazard is present regarding past adaptation. However, there is a potential avenue after 2005 for insurance coverage to lower businesses’ intentions to employ more adaptation measures after a flood.”

According to the news reporters, the research concluded: “This has significant policy relevance such as opportunities for strengthening the link between insurance and risk reduction measures and boosting insurance coverage against flooding in general.”

This research has been peer-reviewed.

For more information on this research see: The Presence of Moral Hazard Regarding Flood Insurance and German Private Businesses. Natural Hazards, 2022. Natural Hazards can be contacted at: Springer, One New York Plaza, Suite 4600, New York, Ny, United States. (Springer - www.springer.com; Natural Hazards - http://www.springerlink.com/content/0921-030x/)

Our news correspondents report that additional information may be obtained by contacting Paul Hudson, University of York, Dept. of Environment and Geography, York, North Yorkshire, United Kingdom.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1007/s11069-022-05227-9. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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