Revised Risk Assessments

2017 proved to be one of the costliest disaster years on record.  Total damages in the US for the year are estimated to exceed $300 billion.  Insured losses for all natural disasters in 2017 will total around $135 billion.

Do events like these cause (re)insurers to update their risk assessments?  How do firms, consumers, and government respond to a perceived change in risk?  Carolyn Kousky examines these questions in a book chapter titled “Revised Risk Assessments and the Insurance Industry” in the recently released Policy Shock, edited by Edward J. Balleisen, Lori S. Bennear, Kimberly D. Krawiec, and Jonathan B. Wiener.  The chapter limits its attention to disaster insurance.Read More

Look to Caribbean risk insurance model for US hurricane recovery

The first few days after a disaster, such as we have recently experienced with Hurricanes Harvey and Irma, are about emergency response: making sure people are safe, reuniting families, securing housing, filling necessities and restoring lifelines. But as days shift to weeks and then months and years, the slow process of rebuilding is undertaken. At every step of the way is the question of financing. Are there dollars available for what needs to be done? Who will pay for it? How will the costs be shared?Read More

The Challenges of Disaster Insurance

As Texas begins the long process of recovery from Hurricane Harvey, and Florida braces for a possible hit from Hurricane Irma, too few victims will have the financial support of insurance payouts. Insurance should be a critical component of disaster recovery. Federal disaster aid grants are surprisingly limited, often not more than a few thousand dollars, and it often takes months or years to get into the hands of victims. Small Business Administration loans can be obtained to help finance recovery (for households, as well as businesses), but for fast money for rebuilding, there is no substitute for insurance.Read More