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Natural Disaster Risks: An Introduction, W. Kip Viscusi
Natural Disaster Risks: An Introduction, W. Kip Viscusi
Vanderbilt Law School Faculty Publications
An introduction to a special issue of the Journal of Risk and Uncertainty dealing with the implications of catastrophic events for research on risk and uncertainty. What are the consequences of natural disasters? How do individuals and firms respond to such disasters? How do insurers respond, and how should the government respond? Several of these papers will have a strong normative component as they will suggest what actions individuals, firms, and the government should take in anticipation of natural disasters.
The Catastrophic Effects Of Natural Disasters On Insurance Markets, W. Kip Viscusi, Patricia Born
The Catastrophic Effects Of Natural Disasters On Insurance Markets, W. Kip Viscusi, Patricia Born
Vanderbilt Law School Faculty Publications
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 unexpected catastrophes as well as large events that the authors term "blockbuster catastrophes." Insurers adapt to these catastrophic risks by raising insurance rates, leading to lower loss ratios after the catastrophic event. There is a widespread event of unexpected catastrophes and blockbuster catastrophes that reduces total premiums earned in the …