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Catastrophe insurance market in the Caribbean Region : market failures and recommendations for public sector interventions

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  • Auffret, Philippe

Abstract

The Caribbean region suffers from a high degree of economic volatility. A history of repeated external and domestic shocks has made economic insecurity a major concern across the region. Of particular concern to all households, especially the poorest segments of the population, is the exposure to shocks that are generated by catastrophic events or natural disasters. The author develops a conceptual framework for risk management and shows that the insurance market for catastrophic risk in the Caribbean region remains a"thin"market characterized by"high"prices and"low"transfer of risk. He analyzes the possible market failures which could explain the lack of development of the catastrophe insurance market. Finally he outlines a set of recommendations for public sector interventions.

Suggested Citation

  • Auffret, Philippe, 2003. "Catastrophe insurance market in the Caribbean Region : market failures and recommendations for public sector interventions," Policy Research Working Paper Series 2963, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2963
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    References listed on IDEAS

    as
    1. Arellano, Manuel, 1993. "On the testing of correlated effects with panel data," Journal of Econometrics, Elsevier, vol. 59(1-2), pages 87-97, September.
    2. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    3. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
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    Citations

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    Cited by:

    1. Céline Grislain-Letrémy, 2018. "Natural Disasters: Exposure and Underinsurance," Annals of Economics and Statistics, GENES, issue 129, pages 53-83.
    2. repec:dau:papers:123456789/13276 is not listed on IDEAS
    3. Joanne Linnerooth-Bayer & Reinhard Mechler, 2006. "Insurance for assisting adaptation to climate change in developing countries: a proposed strategy," Climate Policy, Taylor & Francis Journals, vol. 6(6), pages 621-636, November.
    4. Evan Mills, 2007. "Synergisms between climate change mitigation and adaptation: an insurance perspective," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 12(5), pages 809-842, June.
    5. Alex Julca & Oliver Paddison, 2010. "Vulnerabilities and migration in Small Island Developing States in the context of climate change," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 55(3), pages 717-728, December.
    6. Beck, Thorsten & de la Torre, Augusto, 2006. "The basic analytics of access to financial services," Policy Research Working Paper Series 4026, The World Bank.
    7. Moore, Winston & Phillips, Willard, 2014. "Review of ECLAC damage and loss assessments in the Caribbean," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38356, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

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