Climate Risk Management and Institutional Learning
AbstractInsurance companies are a prominent mechanism for risk transfers. Many initiatives are looking toward private–public partnerships and new risk-management instruments to provide a cushion for climate change-related effects. For this aspiration to be fulfilled, insurers and institutions within which they operate need to learn about emergent risks and develop workable strategies. We explore three factors shaping the evolution of insurance practices - quantitative models of catastrophic loss, experience of catastrophic loss, and outcomes of litigated cases. We use the available evidence to assess the importance of each of these factors in how the industry is evolving and, hence, what actual risk reductions and transfers are more likely in the future.
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Bibliographic InfoPaper provided by Resources For the Future in its series Discussion Papers with number dp-07-19.
Date of creation: 21 Aug 2007
Date of revision:
climate change; insurance; risk management; climate change litigation; insurance modeling and learning;
Find related papers by JEL classification:
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
- K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
- G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies
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- George L. Priest, 2003. "Government Insurance versus Market Insurance," The Geneva Papers on Risk and Insurance, The International Association for the Study of Insurance Economics, vol. 28(1), pages 71-80, 01.
- Howard C. Kunreuther & Erwann O. Michel-Kerjan, 2007. "Climate Change, Insurability of Large-scale Disasters and the Emerging Liability Challenge," NBER Working Papers 12821, National Bureau of Economic Research, Inc.
- Dwight M. Jaffee & Thomas Russell, 1996. "Catastrophe Insurance, Capital Markets and Uninsurable Risks," Center for Financial Institutions Working Papers 96-12, Wharton School Center for Financial Institutions, University of Pennsylvania.
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