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The Catastrophic Effects of Natural Disasters on Insurance Markets

dc.contributor.authorViscusi, W. Kip
dc.contributor.authorBorn, Patricia, 1964-
dc.identifier.citation33 Journal of Risk and Uncertainty 55 (2006)en_US
dc.descriptionArticle published in a journal of theoretical and empirical papers that analyze risk-bearing behavior and decision-making under uncertainty.en_US
dc.description.abstractNatural 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.en_US
dc.format.extent1 PDF (34 pages)en_US
dc.publisherJournal of Risk and Uncertaintyen_US
dc.subject.lcshNatural disasters -- Economic aspects -- United Statesen_US
dc.subject.lcshHomeowners insurance -- United Statesen_US
dc.subject.lcshInsurance companies -- United States -- Financeen_US
dc.titleThe Catastrophic Effects of Natural Disasters on Insurance Marketsen_US

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