It’s About Time to Discuss the Details of a Better Insurance Against Natural Hazards

Damage to residential buildings caused by natural disasters will increase as climate change progresses. However, in Germany not all buildings are insured against it. This article gives an overview on the current debate in Germany on how to improve the common state of insurance. We present new empirical evidence on the acceptance of natural disaster insurances and outline the key parameters that should be subject to regulation. This includes the types of natural disasters that should typically covered by such an insurance, the level of the deductible to be paid by the household, state support for paying off the deductible, ways to deal with risk clusters that single insurers might face, as well as the specification of a stop-loss threshold to cap the insurers’ financial risks.