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Economics of Insurance against Natural Catastrophes: Over-Burdened Arab Insurers

Author

Listed:
  • Abdel-Raheem F. Fares

    (College of Economics and Business Administration, Department of Banking and Finance, Al-Zaytoonah University)

  • Eid Ahmad Abou-Bakr

    (Faculty of Commerce, Beni-Suif University, EGYPT)

Abstract

Natural catastrophes increased over time in numbers and in economic losses. This trend is expected to continue. Reinsurers operating in high risk areas attempted to transfer part of their huge losses to the financial markets or to less risky areas domestically or internationally, including Arab countries. Statistics show relatively low number of events and low economic losses resulting from natural catastrophes in Arab countries. The risk transfers over-burdened Arab insurance companies. These transfers did not receive serious academic attention. The present paper studies aspects of insurance and reinsurance against natural catastrophes, studies risk transfers and presents suggestions to reduce the extra burden that transfers inflect upon Arab insurers.

Suggested Citation

  • Abdel-Raheem F. Fares & Eid Ahmad Abou-Bakr, 2012. "Economics of Insurance against Natural Catastrophes: Over-Burdened Arab Insurers," Review of Economics & Finance, Better Advances Press, Canada, vol. 2, pages 95-105, August.
    • Handle: RePEc:bap:journl:120308
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    References listed on IDEAS

    as
    1. David Cummins & Christopher Lewis & Richard Phillips, 1999. "Pricing Excess-of-Loss Reinsurance Contracts against Cat as trophic Loss," NBER Chapters, in: The Financing of Catastrophe Risk, pages 93-148, National Bureau of Economic Research, Inc.
    2. Patricia Born & W. Viscusi, 2006. "The catastrophic effects of natural disasters on insurance markets," Journal of Risk and Uncertainty, Springer, vol. 33(1), pages 55-72, September.
    3. Kunreuther, Howard, 1996. "Mitigating Disaster Losses through Insurance," Journal of Risk and Uncertainty, Springer, vol. 12(2-3), pages 171-187, May.
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    More about this item

    Keywords

    Insurance and reinsurance against natural catastrophes; Protecting Arab insurers; Risk transfers in insurance; Demand and supply for insurance against natural catastrophes;
    All these keywords.

    JEL classification:

    • F01 - International Economics - - General - - - Global Outlook
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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