Does Federal Assistance Crowd Out Private Demand for Insurance?


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At this boardroom briefing Dr Paul Raschky discusses his research on the impact of government provided disaster relief on insurance coverage.

The research presents the first causal estimates of the effect of federal disaster relief on insurance demand using a unique panel dataset of insurance contracts and disaster aid disbursements. The research finds that a $1,000 increase in average aid grants decreases average insurance coverage by about $6,000, with variation depending on aid amount. The study does not however find that government aid has a significant impact on insurance take-up rates.

The discussion also covers possible alternatives to government grants for individuals in disaster affected areas such as loan arrangements which, the study shows, do not have the same negative impact on insurance coverage.

The briefing provides a forum to discuss key issues around the unintended consequences of government intervention in providing disaster relief.

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