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Risk Management Roles of the Public and Private Sector

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  • Carolyn Kousky
  • Howard Kunreuther

Abstract

Insurance is an essential component of household and community resilience. It protects insureds financially against disaster losses, can encourage investments in cost‐effective mitigation measures through premium reductions, and facilitates the rebuilding of property and long‐term recovery. Private insurers face challenges in providing full protection against disasters. This has led governments around the world to create a variety of public insurance entities, often designed as public‐private partnerships. At a November 2016 workshop, “Improving Disaster Financing: Evaluating Policy Interventions in Disaster Insurance Markets,” participants evaluated disaster insurance programs for flood, earthquake, and terrorism losses. This article synthesizes six papers and findings from the workshop and suggests ways to improve public‐private partnerships for disaster financing in three interrelated areas: (1) risk communication, (2) risk reduction, and (3) risk transfer. It concludes with a proposal for a comprehensive insurance program that could harness the benefits of both the public and private sectors.

Suggested Citation

  • Carolyn Kousky & Howard Kunreuther, 2018. "Risk Management Roles of the Public and Private Sector," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 21(1), pages 181-204, March.
    • Handle: RePEc:bla:rmgtin:v:21:y:2018:i:1:p:181-204
    DOI: 10.1111/rmir.12096
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    References listed on IDEAS

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    Cited by:

    1. Aoqing Li & Zaiwu Gong & Jeffrey Yi-Lin Forrest, 2023. "Financial fund allocation in China's catastrophe insurance market: a game-theoretic analysis," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 117(3), pages 3181-3202, July.
    2. Meri Davlasheridze & Qing Miao, 2021. "Does post-disaster aid promote community resilience? Evidence from federal disaster programs," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 109(1), pages 63-88, October.
    3. Kendra Marcoux & Katherine R. H. Wagner, 2023. "Fifty Years of U.S. Natural Disaster Insurance Policy," CESifo Working Paper Series 10431, CESifo.
    4. Qihao He & Michael Faure & Chengwei Liu, 2023. "The possibilities and limits of insurance as governance in insuring pandemics," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 48(3), pages 641-668, July.
    5. Howard Kunreuther & Jason Schupp, 2021. "Evaluating the Role of Insurance in Managing Risk of Future Pandemics," NBER Working Papers 28968, National Bureau of Economic Research, Inc.

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