Does public flood aid crowd out private insurance II? (Firm survey)

This is the second part of the project. The first part consisted in a household survey (registered as RCT ID: AEARCTR-0008603, on November 28, 2021). In the second part we carry out a similar survey but focus on firms.

The firm surveys concentrate on a region (Upper Baveria, and in particular Oberland) which has experienced several flood events in recent years. Firms are recruited into the surveys via different channels: telephone calls, and invitations to participate in an online survey via local media, regional development agencies, and banks.

The firm questionnaire is analogue to the household questionnaire (with small adjustments), but also includes extra sections on: a) flood experience (e.g. type and size of damage experienced); and b) physical adaptation measures. Further details are provided below.

---
Policymakers often do not want to promise flood aid ex-ante, to encourage households and firms in flood-prone areas to take up flood insurance. But ex-post, they feel compelled to provide aid to flood victims. This tension is visible in recent policy decisions in Germany, where commitments to stop providing aid were followed by promises to cover most of the damage suffered by the victims of heavy floods in the summer of 2021.

We perform an information treatment where we provide respondents with information about these policy decisions. The sample is split in two groups, which receive, respectively: 1) information about actual aid to flood victims, and 2) generic information about flooding world-wide. (Given the difficulty in recruiting firms, and the smaller sample size, we split the sample into two information groups, as opposed to the three groups in the household survey).

We ask expectations of flood aid before and after the information treatment, to check whether expectations are updated. We then ask about two main outcomes: the willingness to pay for private flood insurance, and support for a policy that introduces mandatory flood insurance.

The starting hypotheses are:

1) the flood aid treatment decreases a) willingness to pay for flood insurance, b) willingness to pay for physical adaptation measures, and c) support for mandatory flood insurance;

2) the effect is concentrated among firms that i) express a high concern about flood risk; and ii) update their expectations substantially as a result of the information treatment.