Managing the Risk of Natural Catastrophes: The Role and Functioning of State Insurance Programs

Resources for the Future DP 10-30

33 Pages Posted: 24 Sep 2010

Date Written: September 22, 2010

Abstract

This paper surveys state-mandated programs designed to provide natural catastrophe insurance to property owners and businesses unable to find a policy in the private market. The paper provides an overview of the 10 state programs offering wind or earthquake coverage and outlines the motivation for establishing such programs. The implications of design and operation decisions, such as pricing strategies and contract options, are discussed, as well as how these programs interact with the private property insurance market. Finally, the paper examines whether such programs can handle a truly catastrophic loss year and the merits and drawbacks of federal support for the programs.

Keywords: insurance, catastrophe, hurricane, earthquake, residual market mechanisms

JEL Classification: G22, H79, Q54

Suggested Citation

Kousky, Carolyn, Managing the Risk of Natural Catastrophes: The Role and Functioning of State Insurance Programs (September 22, 2010). Resources for the Future DP 10-30, Available at SSRN: https://ssrn.com/abstract=1680882 or http://dx.doi.org/10.2139/ssrn.1680882

Carolyn Kousky (Contact Author)

Environmental Defense Fund ( email )

1875 Connecticut ave
257 Park Avenue South
Washington, DC 20009
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
176
Abstract Views
1,502
Rank
307,910
PlumX Metrics