IDEAS home Printed from https://ideas.repec.org/p/lmu/msmdpa/2026.html
   My bibliography  Save this paper

Public-Private-Partnerships

Author

Listed:
  • Klimaszewski-Blettner, Barbara
  • Richter, Andreas

Abstract

The continuing trend of increasing frequency and severity of losses from natural and man-made-catastrophes during the last decades has drawn attention to catastrophe risk management. Considering the loss potential of catastrophic events, the private insurance markets' capacity does not seem to be suffi-cient. Problems concerning the supply of adequate catastrophe insurance coverage – resulting mainly from insurability constraints – are aggravated by difficulties of lacking insurance demand. This paper addresses aspects of efficient solutions to increase the supply of and demand for insurance coverage against catastrophic threats. In this context, the government`s role as a risk bearer becomes an increasingly important issue. In particular, we will demonstrate that "pure private" and "pure public" strategies are dominated by "mixed" strategies involving a cooperation of the private and the public sec-tor. Based on an adequate design of a Public-Private Partnership, advantages of the private insurance market can be combined with the state’s capacity reserves and power to set a general (legal) framework for improving a society’s risk sharing and risk management. Strategies with public involvement are more or less severe interventions in the market system which re-quires them to be well-motivated and makes them applicable under certain conditions only. Supplying public capacity for losses from catastrophe events may be favoured from an economic point of view to expand the limits of insurability, but only by using risk-adequate pricing strategies and not for permanent subsidisation of certain business sectors. The state’s role consists not only in supplying coverage capac-ity, but also in setting an adequate general framework (building regulations, land use planning, etc.) to assure necessary claim prevention. On the other hand, in order to increase the demand for catastrophe insurance, establishing mandatory insurance for fundamental risks can be considered as a useful tool for internalizing externalities caused by lacking insurance demand. Besides the introduction of a compulsory insurance system, general conditions must be set by the state in order to assure the acceptance of manda-tory insurance (tax-privileged provisions, public capacity support for "uninsurable" individual risks, etc.).

Suggested Citation

  • Klimaszewski-Blettner, Barbara & Richter, Andreas, 2007. "Public-Private-Partnerships," Discussion Papers in Business Administration 2026, University of Munich, Munich School of Management.
  • Handle: RePEc:lmu:msmdpa:2026
    as

    Download full text from publisher

    File URL: https://epub.ub.uni-muenchen.de/2026/1/Klimaszewski_Richter_09_2007.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Browne, Mark J & Hoyt, Robert E, 2000. "The Demand for Flood Insurance: Empirical Evidence," Journal of Risk and Uncertainty, Springer, vol. 20(3), pages 291-306, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Katastrophenrisiken; Versicherungspflicht; Public-Private-Partnership;

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lmu:msmdpa:2026. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Debbie Claassen). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.