The Future of Global Reinsurance
AbstractTo provide a map to the future, we need a realistic appraisal of how we got where we are. This is the story of how humans have hedged risks. There are two basic and distinct approaches: statistical and economical. The former is typical of the insurance industry; the latter typifies the securities industry. Both are needed to manage today's catastrophic risks. Neither alone will do. I will show below how a combination of both leads to efficient outcomes, and is the way to be the future. Hedging unknown catastrophic risks requires a blend of skills from the securities and the insurance industries. By tapping large and liquid capital markets, reinsurers will be better able to deal with correlated, catastrophic risks. At the end of the intelligent customized use of derivatives and technology will separate the winners from the losers.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 8334.
Date of creation: 1996
Date of revision:
hedging; hedge risk; reinsurance; catastrophe; catastrophic risks; securitization; environmental risks; global finance; catastrophe bundles; pricing;
Find related papers by JEL classification:
- G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cass, David & Chichilnisky, Graciela & Wu, Ho-Mou, 1996. "Individual Risk and Mutual Insurance," Econometrica, Econometric Society, Econometric Society, vol. 64(2), pages 333-41, March.
- Chichilnisky, Graciela, 1996. "Financial Innovation in Property Catastrophe Reinsurance: The Convergence of Insurance and Capital Markets," MPRA Paper 8333, University Library of Munich, Germany.
- Graciela Chichilnisky & Geoffrey Heal, 1993.
"Global Environmental Risks,"
Journal of Economic Perspectives,
American Economic Association, vol. 7(4), pages 65-86, Fall.
- Chichilnisky, G. & Heal, G., 1993. "Global Environmental Risks," Discussion Papers, Columbia University, Department of Economics 1993_03, Columbia University, Department of Economics.
- repec:fth:coluec:645 is not listed on IDEAS
- Chichilnisky, Graciela, 1998. "The economics of global environmental risk," MPRA Paper 8812, University Library of Munich, Germany.
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