Insurance as a solution to disaster risk reduction

Posted on October 16, 2007 / 3 Comments

Based on Shiller’s writings on the use of insurance as a device to reduce losses from tsunami type events, LIRNEasia has been looking at insurance as a part of the solution. However, the story below suggests that insurance is on the retreat in Shiller’s backyard, in the face of predictions of more violent storms.

In contrast, the following posters, promising “on-the-spot” insurance payments for earthquakes and tsunamis came up on the streets of Colombo, shortly after the September 12th, 2007 false warning:

Home Insurers Canceling in East Over Storm Fears – New York Times

It is 1,200 miles from the coastline where Hurricane Katrina touched land two years ago to the neat colonial-style home here where James Gray, a retired public relations consultant, and his wife, Ann, live. But this summer, Katrina reached them, too, in the form of a cancellation letter from their home-insurance company.

The letter said that “hurricane events over the past two years” had forced the company to limit its exposure to further losses; and that because the Grays’ home on Long Island was near the Atlantic Ocean — it is 12 miles from the coast and has been touched by rampaging waters only once, when the upstairs bathtub overflowed — their 30-year-old policy was “nonrenewed,” or canceled.

3 Comments

Janni
March 19, 2008, 8:30 pm
I am afraid of the insurance companies, we pay them and when a disaster come are they going to be here for the payback?
harsha de silva
March 20, 2008, 11:56 am
not so.

that is why there are re-insurance companies; those who insure insurance companies [like swiss re. and munich re.]. world over this is how local insurance companies mitigate their own risk.

however in the case of sri lanka, yes, the government in its 2007 budget proposed that something like 50% of reinsurance of local companies would be undertaken by a new SOE called sri lanka national reinsurance traust fund. bad move. after much protests the government in the 2008 watered down the original proposals to a level that they are no longer meaningful. so sanity prevailed and we are back to where we were, like other progressive countries.

hope this answers your question janni.
Frank with Atlanta Insurance
November 24, 2009, 10:34 pm
Just look at what is happening in Florida. For those that haven’t had their homeowners insurance been canceled yet – many simply can’t afford it any more. We are seeing a huge increase of people moving from Florida up here to Atlanta. Many of these are retired folks that they would be in Florida for the rest of their lives.