Advanced Search
MyIDEAS: Login

The Development of New Catastrophe Risk Markets

Contents:

Author Info

  • Howard C. Kunreuther
  • Erwann O. Michel-Kerjan

    ()
    (Center for Risk Management and Decision Processes, Wharton School of the University of Pennsylvania, Philadelphia, Pennsylvania 19104)

Registered author(s):

    Abstract

    The large-scale disasters that have occurred since 2001 suggest that we have entered a new era of catastrophes. We are more vulnerable to extreme events as a result of the increasing concentration of population and activities in exposed areas of the country. The question is not whether large-scale catastrophe will occur, but when and how frequently they will strike. One key question is, Who will pay for the economic losses future disasters will inflict? This paper discusses how new catastrophe risk markets can be developed to provide the necessary financial coverage to make our country more resilient. We look specifically at insurance-linked financial instruments to complement traditional insurance and reinsurance. We also propose the development of long-term insurance and long-term loans to overcome behavioral biases such as myopia and misperception of risks. The paper concludes by proposing risk management strategies that apply to other extreme events such as the financial crisis of 2008–2009.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev.resource.050708.144302
    Download Restriction: Full text downloads are only available to subscribers. Visit the abstract page for more information.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Annual Reviews in its journal Annual Review of Resource Economics.

    Volume (Year): 1 (2009)
    Issue (Month): 1 (09)
    Pages: 119-137

    as in new window
    Handle: RePEc:anr:reseco:v:1:y:2009:p:119-137

    Contact details of provider:
    Postal: Annual Reviews 4139 El Camino Way Palo Alto, CA 94306, USA
    Web page: http://www.annualreviews.org

    Order Information:
    Web: http://www.annualreviews.org/action/ecommerce

    Related research

    Keywords: extreme events; mitigation; alternative risk transfer instruments; long-term insurance;

    Find related papers by JEL classification:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:anr:reseco:v:1:y:2009:p:119-137. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (http://www.annualreviews.org).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.