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dc.contributor.authorJametti, Marioen_US
dc.contributor.authorvon Ungern-Sternberg, Thomasen_US
dc.description.abstractWe model natural disaster insurance in France. We explicitly take into account the main institutional features of the system, such as the uniform premium rate in both high and low risk regions and the existence of a state reinsurance company. Our model indicates that the institutional set-up is fundamentally flawed. We find that the market is likely to lead to ?specialist? equilibria, where insurers specialize in serving either high or low risk regions. As a result the reinsurance company, which offers cover to all insurers at the same price, is likely to suffer from a portfolio with mainly ?bad? risks. We show that increasing the premium rate customers have to pay, a policy undertaken by the French authorities, will not necessarily solve these problems and comes at a high cost to the final consumer (and taxpayer).en_US
dc.publisherCenter for Economic Studies and Ifo Institute (CESifo) Munichen_US
dc.relation.ispartofseriesCESifo working papers 1303en_US
dc.subject.keywordproperty insuranceen_US
dc.subject.keywordrisk selectionen_US
dc.titleDisaster insurance or a disastrous insurance : natural disaster insurance in Franceen_US
dc.typeWorking Paperen_US
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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