Disaster zone

Phil Davies and Richard M. Todd

The Region, 2006, vol. 20, issue Dec, 6-9, 40-41

Abstract: The economics of catastrophe risks are fundamentally different from those of risks covered by standard insurance contracts. Size alone is not necessarily the critical difference, nor is the sporadic and unpredictable nature of catastrophes. The key unconventional features needed to deal with the large, time-varying, asymmetric risks inherent in catastrophes are: - between-group trades across time, not just within-group, pay-as-you-go risk pooling; - in normal times, payments by the risk-prone group to the relatively safe group; - when catastrophe strikes, large payments to the risk-prone group by the relatively safe group; - payments by the risk-prone group that may need to be more than ?actuarially fair?; - incentives to mitigate risks and curtail investments in risk-prone regions.

Keywords: Natural disasters; Insurance, Casualty (search for similar items in EconPapers)
Date: 2006
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=3191

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmrr:y:2006:i:dec:p:6-940-41:n:v.20,no.4

Ordering information: This journal article can be ordered from

Access Statistics for this article

More articles in The Region from Federal Reserve Bank of Minneapolis Contact information at EDIRC.
Bibliographic data for series maintained by Jannelle Ruswick ( this e-mail address is bad, please contact ).