Insuring Risks of Large-Scale Disasters
Hurricane Katrina highlighted the fact that the United States does not have a systematic, coherent and well thought out approach for dealing with large-scale natural disasters. It has raised a number of questions regarding the role that insurance can or should play in providing protection against losses to residential and commercial structures from such extreme events. years.
As input into this process, the Wharton Risk Center is working with its partners to examine alternative programs for reducing losses from natural disasters and providing funds for recovery following a catastrophic event. The short-term goal of the study is to develop a strategy document that could be used by key stakeholders in the current policy debate on the role that the private and public sectors should play in mitigating future disaster losses and financing the recovery process.
To this end, the project focuses on the following questions:
- Who are the interested parties involved in dealing with natural disasters, and what are their goals, values and objectives?
- What role can the public sector play in partnering with the private sector in general and the insurance sector in particular to lever its strengths (knowledge, network, financial capacity) in reducing the potential losses from future natural disasters and increasing the speed and efficiency of recovery from any large scale disaster?
- What are the costs, benefits and tradeoffs associated with alternative risk mitigation strategies?
Seminar Series on Risk Regulation
Recent publications
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A Methodological Approach for Pricing Flood Insurance and Evaluating Loss Reduction Measures: Application to Texas December 2011 This study by the Wharton Risk Center and CoreLogic®, aims at better understanding flood risk in the United States and the role that public and private insurance can play in providing financial coverage and reducing losses from this risk to residents in areas subject to water damage from floods and hurricanes. |
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"At War with the Weather" (MIT Press 2009, 2011) Watch the trailer Book review by RMA Journal, October 2009 |
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Who Benefits from Federal Flood Aid? The New York Times, October 1, 2011 |
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| People Get Ready, Issues in Science and Technology, September 2011 by Howard Kunreuther and Erwann Michel-Kerjan Natural catastrophes are becoming more common and more expensive, but human and financial losses can be greatly reduced through incentives to purchase insurance and install protective measures. |
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Redesigning Flood Insurance, Science, July 22, 2011 by Erwann Michel-Kerjan and Howard Kunreuther The U.S. Congress is discussing options for continuing the NFIP. We argue that a new strategy for managing floods can increase personal responsibility, decrease risk, and lower government exposure. Improved scientific knowledge from a range of disciplines will be needed to price the proposed financial products appropriately. |
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"Managing Large-Scale Risks in a New Era of Catastrophes: Insuring, Mitigating and Financing Recovery from Natural Disasters in the United States," An Extreme Events Project of the Wharton Risk Management and Decision Processes Center in conjunction with Georgia State University and the Insurance Information Institute, March 2008. Executive Summary here. Book review by RMA Journal, October 2009 |
