Managing and Financing Extreme Events

earthquake

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, particularly the role that the private and public sectors should play in mitigating future disaster losses and financing the recovery process.

  • 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?

Managing and Financing Extreme Events Research Topics for 2018 

______________________________________________________

Wharton Risk Center’s Involvement with the National Academy of Sciences on Reform of the National Flood Insurance Program (NFIP)

The Homeowner Flood Insurance Affordability Act of 2014 requires FEMA to study ways to improve the financial balance of the NFIP.  The National Academy of Sciences’ National Research Council is addressing this task on behalf of FEMA and Congress. Wharton Risk Center faculty and fellows serve on three NAS committees. 

  • Analysis of Costs and Benefits of Reforms to the National Flood Insurance Program
  • Risk-Based Methods for Insurance Premiums of Negatively-Elevated Structures in the National Flood Insurance Program
  • A Community-Based Flood Insurance Option 

The committees published these reports in 2015:

______________________________________________________

Learning from Hurricane Sandy: A Panel Discussion on Reducing Future Disaster Losses (video)
Expert panel discussion on steps that are being taken to reduce losses from hurricanes and floods, and affordability issues that threaten to delay the implementation of the National Flood Insurance Reform Act of 2012.
Katherine Greig, NYC Mayor’s Office
Sean Kevelighan, Zurich NA
Marion McFadden, HUD
Roy Wright, FEMA
Moderator: Howard Kunreuther, Wharton School

An Incentive-Compatible Experiment on Probabilistic Insurance and Implications for an Insurer's Solvency Level

Demand for Fixed-Price Multi-year Contracts: Experimental Evidence from Insurance Decisions

Examining Flood Insurance Claims in the United States: Six Key Findings

Examining Flood Insurance Claims in the United States: Six Key Findings

Journal of Risk and Insurance, DOI: 10.111/jori.12106, 2015

Six Lessons from Katrina Loom Even Larger 10 Years Later

Maintain the Best Features of Biggert-Waters

Convective Storm Vulnerability: Quantifying the Role of Effective and Well-Enforced Building Codes in Minimizing Missouri Hail Property Damage

Forgetting the Flood? An Analysis of the Flood Risk Discount over Time

Quantifying Riverine and Storm-Surge Flood Risk by Single-Family Residence: Application to Texas

Have We Entered an Ever-Growing Cycle on Government Disaster Relief?

Have We Entered an Ever-Growing Cycle on Government Disaster Relief?

Testimony at the Roundtable for the U.S. Senate Committee on Small Business and Entrepreneurship, Helping Small Businesses Weather Economic Challenges and Natural Disasters, March 14, 2013

Improving Insurance Decisions in the Most Misunderstood Industry

Improving Insurance Decisions in the Most Misunderstood Industry

Testimony at the Roundtable for the U.S. Senate Committee on Small Business and Entrepreneurship, Helping Small Businesses Weather Economic Challenges and Natural Disasters, March 14, 2013

Insuring Future Climate Catastrophes

Insuring Future Climate Catastrophes

Climatic Change, December 2012

Paying for future catastrophes

Paying for future catastrophes

The New York Times Sunday Review, November 24, 2012

Hurricane Sandy was not an isolated event. Twenty of the 30 most expensive insured catastrophes worldwide from 1970 to 2011 have occurred since 2001 — and 13 of them were in the United States. What’s next? And who will pay?

How resilent is your country?

Nature-pageHow resilent is your country?

Nature, November 2012

Extreme events are on the rise. Governments must implement national and integrated risk-management strategies.

A Methodological Approach for Pricing Flood Insurance and Evaluating Loss Reduction Measures: Application to Texas

Texas-coverA Methodological Approach for Pricing Flood Insurance and Evaluating Loss Reduction Measures: Application to Texas

January 2012

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.

“At War with the Weather”

AWwtWtrailer“At War with the Weather” (MIT Press 2009, 2011)

Watch the trailer

Book review by RMA Journal, October 2009

Who Benefits from Federal Flood Aid?

Who Benefits from Federal Flood Aid The New York Times, October 1, 2011

by Howard Kunreuther

Op-ed by Howard Kunreuther on reforms to the National Flood Insurance Program.

People Get Ready

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.

Redesigning Flood Insurance

RedesigningFloodIns_1Redesigning 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.

Managing Large-Scale Risks in a New Era of Catastrophes: Insuring, Mitigating and Financing Recovery from Natural Disasters in the United States

MLSRcover“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