Economic Effects of Natural Disasters in terms of Climate Change and Insurance

Authors
Leili Niakan 1
Vahid Majed 2
Saeed Karirmi Moatamed 2
1 Insurance Research Center
2 Faculty of Economics University of Tehran
Abstract
Objective: Natural disasters, especially those caused by climate change, have far-reaching effects on economies and societies. Disasters bring direct and indirect damages that can seriously affect economic growth. It is expected that these damages will increase even more in the future due to climate change and increasing vulnerability of societies. Study has investigated one of the indirect economic effects of natural disasters, i.e. reducing the growth of the gross domestic product (GDP), and the role of insurance in reducing these effect. The main goal of the study is to analyze the impact of natural disasters on economic growth in member and non-member countries of the Organization for Economic Co-operation and Development (OECD) and evaluate the role of insurance in moderating these effects.

Materials and Methods: Using panel data from developed and developing countries and using panel regression models with fixed effects, the research has investigated the effect of natural disasters on GDP growth and the role of insurance in adjusting these effects.

Results: The results show that natural disasters have a significant negative effect on the economic growth of both groups of countries, but insurance significantly reduces these negative effects.

Conclusion: Development of insurance coverage in developing countries can help reduce the negative economic effects caused by natural disasters and strengthen the sustainability of economic growth, especially in countries like Iran.
Keywords
Natural disasters
Insurance
Economic Growth
Climate Change
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