The Catastrophic Effects of Natural Disasters on Insurance Markets / W. Kip Viscusi, Patricia Born.

Format:

Book

Author/Creator:

Viscusi, W. Kip.

Contributor:

National Bureau of Economic Research.

Born, Patricia.

Series:

Working Paper Series (National Bureau of Economic Research) no. w12348.

NBER working paper series no. w12348

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2006.

Summary:

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 state, reduces the total number writing insurance coverage in the state, and leads to the exit of firms from the state. Firms with low levels of homeowners' premiums are most adversely affected by the catastrophes.

Notes:

Print version record

July 2006.