Article in Journal
Compulsory Insurance for Natural Hazards?
Clemens Fuest, Marcel Thum
ifo Institut, Dresden, 2021
ifo Dresden berichtet, 2021, 28, Nr. 5, 18-19
ifo Institut, Dresden, 2021
ifo Dresden berichtet, 2021, 28, Nr. 5, 18-19
After the Elbe floods in 2002, a compulsory insurance scheme was discussed. Compulsory insurance was not introduced at that time. Compulsory insurance can make economic sense to relieve the government from the Samaritan's dilemma and increase resilience to natural disasters. But it can become an economic boomerang if essential components of such an insurance solution are watered down in the political process. Properly designed compulsory insurance can therefore help, while improperly designed insurance can be worse than none at all.