Lessons from the Texas Homeowners Insurance Crisis Bob Puelz ...

Table 7
GMM Estimates of Empirical Equation (1)
GMM IV Panel Data
Estimator
Coefficient t-stat
Intercept 2.219 4.25
Perils:
Fire 0.00882 2.98
Wind 0.00130 3.23
Water 0.01781 4.65
Theft 0.02626 0.79
Other 0.00061 0.30
Liability 0.00951 3.05
VMM 0.24140 2.24
Proxy for Uncertainty:
Deviation t-1 -0.04443 -3.02
Control Variables:
Crime 0.00003 2.24
ln(Income) 0.08315 1.68
ln(Housing Units) -0.12202 -9.35
ln(Proportion Rural Housing) -0.06017 -3.32
ln(Proportion Vacant) 0.07539 2.35
ln(Proportion Rent) -0.03693 -0.78
ln(Household Size) 0.02742 0.23
ln(Proportion of Population Non-White) -0.01566 -1.07
Lagged Perils:
Fire t-1 0.01315 4.16
Wind t-1 0.00564 2.84
Water t-1 0.04271 4.15
Theft t-1 0.04772 1.19
Other t-1 -0.00589 -1.92
Liability t-1 0.01653 3.71
VMM t-1 0.24618 2.60
34
F-Stat
n
13.79
1215
Note: The Arellano-Bond (1991) test for AR(1) in first differences was rejected (z = 2.51),
while the same test for AR(2) could not be rejected (z = 0.98).
Table 8
Association Among Perils Relative to Fire
Perils
Estimated Elasticity
% Difference Relative to
Fire
Water 0.016813 125.16%
Fire 0.007467 -
VMM 0.003862 -48.27%
Wind 0.003547 -52.49%
Liability 0.002446 -67.24%