Flood Insurance and Claims: The Impact of the Community Rating System

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AAEA members release new research in AEPP.

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Hurricanes Sandy and Katrina reeked havoc on our southern and eastern coastlines. With recent flooding along the Mississippi River and the near-miss of Hurricane Barry on the Gulf Coast is a reminder of the constant flood risk faced by communities and the need to be prepared for flood events.

In a new article released in the Applied Economic Perspectives & Policy, “Flood Insurance and Claims: The Impact of the Community Rating System,” Eugene Frimpong from East Carolina University and Ardian Harri, Daniel Petrolia, and John Cartwright from Mississippi State University look into what it would take to increase participation in the National Flood Insurance Program (NFIP).

Petrolia says, “We find a positive relationship between participation in the Community Rating System (CRS) and participation in the NFIP. However, we find that only those communities participating at the highest levels of the CRS realize real reductions in flood claims. So the policy discounts associated with CRS participation appear to be attracting more homeowners to insure, but only in very limited cases do the levels (and types) of CRS participation appear to lead to real reductions in exposure.

If you are interested in setting up an interview with Petrolia, please contact Allison Scheetz in the AAEA Business Office.

About AAEA: Established in 1910, the Agricultural & Applied Economics Association (AAEA) is the leading professional association for agricultural and applied economists, with 2,500 members in more than 60 countries. Members of the AAEA work in academic or government institutions as well as in industry and not-for-profit organizations, and engage in a variety of research, teaching, and outreach activities in the areas of agriculture, the environment, food, health, and international development. The AAEA publishes two journals, the American Journal of Agricultural Economics and Applied Economic Perspectives & Policy, as well as the online magazine Choices and the online open access publication series Applied Economics Teaching Resources. To learn more, visit http://www.aaea.org.

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Allison Scheetz
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