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Mitigating Disaster Losses through Insurance

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Author Info
Kunreuther, Howard
Abstract

Losses from natural disasters have increased in recent years due to growth of population in hazard-prone areas and inadequate enforcement of building codes. This article first examines why homeowners have not voluntarily adopted cost-effective protective measures and have limited interest in purchasing insurance. It then proposes a disaster-management program which utilizes insurance coupled with well-enforced buildings codes to reduce future damage. Banks and financial institutions play a key role in this program by requiring inspections of homes as a condition for a mortgage. New forms of reinsurance coverage against catastrophic losses from natural disasters are necessary to protect insurers against potential insolvency from the next mega-disaster. Copyright 1996 by Kluwer Academic Publishers

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Publisher Info
Article provided by Springer in its journal Journal of Risk and Uncertainty.

Volume (Year): 12 (1996)
Issue (Month): 2-3 (May)
Pages: 171-87
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Handle: RePEc:kap:jrisku:v:12:y:1996:i:2-3:p:171-87

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