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The Disaster Insurance Project Wharton Center for Risk Management and Decision Processes University of Pennsylvania Insurance Information Institute and Center for Risk Management and Insurance Research Georgia State University Advisory Committee Meeting Wharton School
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The Disaster Insurance Project Wharton Center for Risk Management and Decision Processes University of Pennsylvania Insurance Information Institute and Center for Risk Management and Insurance ResearchGeorgia State University
Advisory Committee Meeting
University of Pennsylvania
June 16, 2006
Natural disasters in the US have caused severe insured losses in recent years
Most costly years in the history of catastrophe insurance:
2005 and 2004 in that order. Will 2006 or 2007 be even worse?
Victims complain about receiving substantially less than the actual costs to repair or rebuild their damaged structures from Katrina
Federal government is committed to providing liberal disaster assistance to aid the victims of Katrina and rebuild the Gulf Coast
Who are the interested parties involved in dealing with natural disasters, and what are their goals, values and objectives?
What role can the public sector play in partnering with the private sector in general and the insurance sector in particular to lever its strengths (knowledge, network, financial capacity) in reducing the potential losses from future natural disasters and increasing the speed and efficiency of recovery from any large scale disaster?
How will losses be shared among affected parties after the next disaster? What are the current loss sharing mechanisms in place?
What are the costs, benefits and tradeoffs associated with alternative risk mitigation strategies?
Focus on homeowner insurance (as a first step; possible extension to commercial later on)
Focus on disaster insurance and reinsurance markets in 5 states and metropolitan areas:
Structure of Disaster Insurance
Property Insurance in
Selected States and
State Market &
EP Curves with
First workshop (with sponsors): June 15, 2006 (Wharton)
Preliminary report (September) and Feedback from sponsors and other organizations (October)
Wharton Disaster Insurance Forum (wider group of participants) : Autumn 2006 (Date to be announced)
Publication of final report: End of 2006
Should all property owners be required to have protection against catastrophic losses?
How many homeowners are uninsured against damage from natural hazards in risk-prone areas?
What role should regulation play?
What are the liability issues?
What type of special treatment should be given low income families residing in hazard-prone areas? (equity issues)