纽约联储-财产保险经济学（英）

Economics of Property Insurance Hyeyoon Jung | Jaehoon (Kyle) Jung NO. 1171 NOVEMBER 2025 Economics of Property Insurance Hyeyoon Jung and Jaehoon (Kyle) Jung Federal Reserve Bank of New York Staff Reports, no. 1171 November 2025 https://doi.org/10.59576/sr.1171 Abstract We study the economics of homeowners’ property insurance by examining how contract design balances the trade-off between incentive alignment and risk sharing. Using granular contract-level property insurance data merged with property-level disaster risk for millions of U.S. households, we develop and structurally estimate a model in which insurers optimally determine contract terms given property risk and household risk preferences. The estimates provide, to our knowledge, the first large-scale contract-level structural measures of risk aversion, risk premia, and the cost of moral hazard, allowing us to quantify how disaster risk is allocated between insurers and households. We find that the cost of moral hazard is small, yet the very mechanism used to mitigate it substantially increases households’ exposure to disaster risk: contract design leaves policyholders exposed to roughly 29 percent of total expected losses. This residual exposure is most pronounced for low-FICO households and for properties with the greatest tail risk. Counterfactuals indicate that mandating full insurance would lead to substantial market exit, increasing household vulnerability. We further show that insurers’ financial constraints are systematically correlated with the riskiness of underwritten properties and with household characteristics. JEL classification: C6, D8, G1, G2, G3 Key words: insurance, financial constraints, household finance, moral hazard, contracting _________________ H. Jung: Federal Reserve Bank of New York (email: hyeyoon.jung@ny.frb.org). J. Jung: New York University, Stern School of Business (email: jj1419@stern.nyu.edu). We thank Neil Kapoor and Katharina Dowlin for their excellent research assistance and Dennis Kongoli and Henry Dyer for invaluable technical help. This paper presents preliminary findings and is being distributed to economists and other interested readers solely to stimulate discussion and elicit comments. The views expressed in this paper are those of the author(s) and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author(s). To view the authors’ disclosure statements, visit https://www.newyorkfed.org/research/staff_reports/sr1171.html. 1IntroductionHousing is the largest component of household wealth in the US; totaling more than $45trillion. This suggests that, from households’ perspective, property risk is primary, notincidental. Losses from natural disasters are rare but lumpy. Realized damages typicallyfar exceed the liquid savings of many households.1Insurance is the primary means of hedging thes