Managing the Risk of Natural Catastrophes: The Role and Functioning of State Insurance Programs
AbstractThis paper surveys state-mandated programs designed to provide natural catastrophe insurance to property owners and businesses unable to find a policy in the private market. The paper provides an overview of the 10 state programs offering wind or earthquake coverage and outlines the motivation for establishing such programs. The implications of design and operation decisions, such as pricing strategies and contract options, are discussed, as well as how these programs interact with the private property insurance market. Finally, the paper examines whether such programs can handle a truly catastrophic loss year and the merits and drawbacks of federal support for the programs.
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Bibliographic InfoPaper provided by Resources For the Future in its series Discussion Papers with number dp-10-30.
Date of creation: 22 Sep 2010
Date of revision:
insurance; catastrophe; hurricane; earthquake; residual market mechanisms;
Find related papers by JEL classification:
- G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
- H79 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
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- Erwann Michel-Kerjan & Frederic Morlaye, 2008. "Extreme Events, Global Warming, and Insurance-Linked Securities: How to Trigger the “Tipping Point”," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan, vol. 33(1), pages 153-176, January.
- Kousky, Carolyn, 2012. "Informing Climate Adaptation: A Review of the Economic Costs of Natural Disasters, Their Determinants, and Risk Reduction Options," Discussion Papers dp-12-28, Resources For the Future.
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