In this research brief, we document important stylized facts about the payout structure and speed of flood insurance claims from the National Flood Insurance Program underwritten by the Federal Emergency Management Agency.
Despite many states having laws limiting how much time insurers have to process claims, survey evidence of wildfire disasters dating back to 2007 has consistently found that about one-third to one-half of dwelling claims remain unsettled after a year, and a similar proportion of respondents complain about delays in the claims process itself, as well as lowball offers.
Our findings provide insights into the circumstances under which payout periods may be extended, and where more streamlined insurance products (e.g., parametric insurance) could provide the most value. Overall, we find that most flood insurance claims are settled relatively quickly, suggesting that the marginal benefits of further accelerating payments may be small.
