This paper has the following two objectives: to examine how reinsurance coupled with new financial instruments can expand coverage to those residing in areas subject to catastrophic losses from natural disasters, and to show how reinsurance and the catastrophe-linked financial instruments can be...

Catastrophe Bonds whose payoffs are tied to the occurrence of natural disasters offer insurers the ability to hedge event risk through the capital markets that could otherwise leave them insolvent if concentrated solely on their own balance sheets. At the same time, they offer investors a unique...

Insurance is the only policy tool in the analyst’s repertoire that can reward individuals for taking loss reduction measures in advance of a disaster by giving them lower premiums while at the same time providing these same policyholders with compensation should they suffer losses from the...

The tragic attacks of September 11 th and the recent bioterrorist threats have raised a set of issues regarding how we deal with events where there is considerable ambiguity and uncertainty on the likelihood of their occurrence and their potential consequences. This paper discusses how one can...

This paper examines the impact that specific risk mitigation measures (RMMs) could have on reducing losses from hurricanes and earthquakes as well as improving the solvency position of insurers who provide coverage against these hazards. We first explore why relatively few individuals adopt...

A key question being raised since September 11 th is the appropriate role of the private and public sectors in reducing losses and offering insurance protection against extreme risks such as natural disasters, technological accidents and terrorist activities. The following scenario illustrates...