6.4 Flood Insurance Model
I am a bit confused on this.
For who is included, it says those who are considered high risk homeowners (>0.1%), but how come mandatory offers makes these assumption? assumes 80% Participation for low risk and 50% for medium risk and 50% for high risk.
So is it mandatory for homeowner whos are high risk homeowners to participate? Or is this optional?
If you can only participate if you are high risk home owners, how come it assumes 80% of low risk homeowner and 50% medium risk homeowner will participate?
Comments
Also how come the participation for high risk is lower %? Wouldn't they want to participate more if they are high risk since they have more to lose? Especially if the premium is capped at 500?
Its mandatory for high risk homeowners to opt in, and optional for everyone else which is why they are making assumptions for the mid and low risk homeowners.
Yeah im not sure about that -> It would seem that based on their description of the model it should be 100% participation for high risk. Im guessing there could be high risks and those HIGH risks (those with GP > 0.1% of the coverage) where it is mandatory for HIGH risks but not high risks. Can't tell for sure without asking the author