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Influence of Catastrophe Risk on Insurance and Reinsurance Markets

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  • Hana Bártová

Abstract

Insurance and reinsurance markets are exposed to influence of unsystematic catastrophe risk, which is caused by adverse development in natural disasters. Deepening of influence is highlighted in relation to irregular and extreme impacts of catastrophes. Insurers face to coverage of random loss events with contribution of reinsurers through a transfer of specified part of non-life risk. Influence of catastrophe risk is assessed through analysis of annual and quarterly development in catastrophe losses, impacts of floods, amount of premium written and reinsurance premium with respect to relations among selected variables. Analysis is focused on specific conditions of the Czech insurance market in context of reinsurance market. The findings concern to negative development in increasing catastrophe and flood losses, which seems to be not in line with changes in premium written, respectively reinsurance premium, which remain at stable level during analysed period. Respecting unfavourable aspect of insufficient data, results emphasize inadequate level of reinsurance of significant catastrophe risk, respectively floods, within the Czech insurance market.

Suggested Citation

  • Hana Bártová, 2017. "Influence of Catastrophe Risk on Insurance and Reinsurance Markets," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2017(4), pages 47-65.
    • Handle: RePEc:prg:jnlefa:v:2017:y:2017:i:4:id:200:p:47-66
    DOI: 10.18267/j.efaj.200
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    References listed on IDEAS

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    1. Froot, Kenneth A., 2001. "The market for catastrophe risk: a clinical examination," Journal of Financial Economics, Elsevier, vol. 60(2-3), pages 529-571, May.
    2. J. David Cummins, 2007. "Reinsurance for Natural and Man‐Made Catastrophes in the United States: Current State of the Market and Regulatory Reforms," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 10(2), pages 179-220, September.
    3. John Pollner, 2012. "Financial and Fiscal Instruments for Catastrophe Risk Management : Addressing Losses from Flood Hazards in Central Europe," World Bank Publications - Books, The World Bank Group, number 9381, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Insurance; Reinsurance; Catastrophe; Flood;
    All these keywords.

    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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