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The Evolving Market for Catastrophic Event Risk
Froot, Kenneth A. - 1999
This paper discusses the recent changes in the market for catastrophe risk. These risks have traditionally been distributed through the insurance and reinsurance systems. However, because insurance companies tend to share relatively small amounts of their cat exposures and because insurance...
Persistent link: https://www.econbiz.de/10012471496
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The Market for Catastrophe Risk : A Clinical Examination
Froot, Kenneth A. - 1999
demonstrate that both features deviate from what theory would predict, yet are characteristic of many transactions, not simply …
Persistent link: https://www.econbiz.de/10012471497
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The Market for Catastrophe Risk : A Clinical Examination
Froot, Kenneth A. - 2001
with natural hazards, such as hurricanes and earthquakes. Risk management theory suggests protection by insurers and other …, especially after cat events. We then examine clinical evidence to understand why the theory fails. Specifically, we examine … hints as to why the theory fails. We explore these hints in eight theoretical explanations and find the most compelling to …
Persistent link: https://www.econbiz.de/10012470619
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The Pricing of Event Risks with Parameter Uncertainty
Froot, Kenneth A. - 2001
Financial instruments whose payoffs are linked to exogenous events, such as the occurrence of a natural catastrophe or an unusual weather pattern depend crucially on actuarial models for determining event (e.g., default) probabilities. In many instances, investors appear to receive premiums far...
Persistent link: https://www.econbiz.de/10012470623
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On The Pricing of Intermediated Risks : Theory and Application to Catastrophe Reinsurance
Froot, Kenneth A. - 1997
We model the equilibrium price and quantity of risk transfer between firms and financial intermediaries. Value-maximizing firms have downward sloping demands to cede risk, while intermediaries, who assume risk, provide less-than-fully-elastic supply. We show that equilibrium required returns...
Persistent link: https://www.econbiz.de/10012472807
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Managing Catastrophic Risk
Kunreuther, Howard - 2012
A principal reason that losses from catastrophic risks have been increasing over time is that more individuals and firms are locating in harm's way while not taking appropriate protective measures. Several behavioural biases lead decision-makers not to invest in adaptation measures until after...
Persistent link: https://www.econbiz.de/10012460523
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Long Term Insurance (LTI) for Addressing Catastrophe Risk
Jaffee, Dwight - 2008
This paper proposes long-term insurance (LTI) as an alternative to the standard annual homeowners policy using lessons from the mortgage market as a benchmark. LTI has the potential to significantly increase social welfare by reducing insurers' administrative costs, lowering search costs and...
Persistent link: https://www.econbiz.de/10012464437
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Reflections on U.S. Disaster Insurance Policy for the 21st Century
Kunreuther, Howard - 2006
The first section of the paper addresses the first question by outlining two principles on which a disaster insurance … question and delineates the opportunities and challenges of a comprehensive disaster insurance program. Section 5 poses a set … of open issues that are currently being addressed by a research project on disaster insurance undertaken by the Wharton …
Persistent link: https://www.econbiz.de/10012466215
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The Catastrophic Effects of Natural Disasters on Insurance Markets
Viscusi, W. Kip - 2006
Natural catastrophes often have catastrophic risks on insurance companies as well as on the insured. Using a very large dataset on homeowners' insurance coverage by state, by firm, and by year for the 1984 to 2004 period, this paper documents the positive effect on losses and loss ratios of both...
Persistent link: https://www.econbiz.de/10012466317
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The Pricing of U.S. Catastrophe Reinsurance
Froot, Kenneth A. - 1997
We explore two theories that have been advanced to explain the patterns in U.S. catastrophe reinsurance pricing. The first is that price variation is tied to demand shocks, driven in effect by changes in actuarially expected losses. The second holds that the supply of capital to the reinsurance...
Persistent link: https://www.econbiz.de/10012472774