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Working Paper
The Bronx Is Burning: Urban Disinvestment Effects of the Fair Access to Insurance Requirements
We study the unintended effects of Fair Access to Insurance Requirements (FAIR) plans developed by 26 states in the 1960s to address insurance redlining in urban neighborhoods. FAIR plans’ problematic features included prohibitions on considering environmental hazards in underwriting, mandatory insurer participation that diluted underwriting incentives, and payouts exceeding market values in declining areas. Using a triple-difference design comparing pre/post-FAIR periods, neighborhoods with/without likely FAIR access, and participating/nonparticipating states, we find that FAIR ...
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Homeowners insurance and climate change
Over the past 25 years, the U.S. has experienced a sharp increase in climate-related disasters totaling billions of dollars in damages. For those whose homes are destroyed, the financial impact can be devastating. Fortunately, many have some of their losses covered by homeowners insurance. In 2017—a particularly costly year in terms of weather-related damages—insurers reported around $68 billion in losses from homeowners insurance claims. Still, with the number and intensity of climate-related disasters on the rise, it is important for us to understand the degree to which homes are ...
Working Paper
Climate Risk, Insurance Premiums and the Effects on Mortgage and Credit Outcomes
As climate change exacerbates natural disasters, homeowners’ insurance premiums are rising dramatically. We examine the impact of premium increases on borrowers’ mortgage and credit outcomes using new data on home insurance policies for 6.7 million borrowers. We find that higher premiums increase the probability of mortgage delinquency, as well as prepayment (driven mainly by relocation). The results hold using a novel instrumental variable. The delinquency effect is greater for borrowers with higher debt-to-income ratios. Both delinquency and prepayment effects are present in both GSE ...
Working Paper
Flood Risk Mapping and the Distributional Impacts of Climate Information
This paper examines the provision of official flood risk information in the United States and its distributional impacts on residential flood insurance take-up. Assembling new data on all flood maps produced after Hurricane Katrina, I first document that updated maps decreased the number of properties zoned in high-risk floodplains and incorrectly omitted five million properties that should have been rezoned inside these areas. Removals and omissions disproportionately occurred in neighborhoods with more Black and Hispanic residents. Leveraging the staggered timing of map updates, I estimate ...
Working Paper
Health Insurance as an Income Stabilizer
We evaluate the effect of health insurance on the incidence of negative income shocks using the tax data and survey responses of nearly 14,000 low income households. Us-ing a regression discontinuity (RD) design and variation in the cost of nongroup pri-vate health insurance under the Affordable Care Act, we find that eligibility for sub-sidized Marketplace insurance is associated with a 16% and 9% decline in the rates of unexpected job loss and income loss, respectively. Effects are concentrated among households with past health costs and exist only for “unexpected” forms of earnings ...