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Pages 285-300

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From page 285... ... See also Supply of coverage B Barrier islands, 146-147 Beach and wind plans, 48-49 Berkshire Hathaway, 75, 78 Boston Manufacturers, 21 Bottomry, 18 Brokers, 23 Buffet, Warren, 75 Building Code Effectiveness Grading Schedule, 136, 138, 166, 220 Building codes adoption of, 77-78 285 Read the entire page →
From page 286... ... 286 compliance/enforcement issues, 4, 10, 102, 166 effectiveness, 10, 11 and externalities, 220-221 fire-related, 157-158 flood-related, 55, 131 grading system, 136, 138, 166 hurricane-related, 7, 102, 123 importance, 157-158, 163, 166 insurance against changes in, 23 insurer involvement in, 164-165, 168 plan review standards, 166 prescriptive, 165 public education on, 166 purposes, 165, 218-219 questions, 221 retrofitting, 90, 166, 167, 201 and risk perception, 68, 218-220 seismic, 7, 56, 67, 68, 77-78, 90, 219 statewide, 123, 165 two-tiered, 165-166 uniform, 158-159, 168-169, 234 voluntary minimum standard, 165 Business interruption policy, 39, 70, 105 C California adoption of mitigation measures, 77-78 insurance regulation, 183 National Flood Insurance Program participation, 141 Office of Emergency Services, 246 California Earthquake Authority assessments on insurers, 79 capacity, 56, 77-78 coverage, 8-9, 39 damage estimation, 84-85 deductible, 77 Index demand for insurance, 56-57, 66, 77 financing/funding, 75-76, 78 formation, 13, 92 mandatory offer law and, 74-75, 78, 91-92 participation in, 76-77-79 private insurance market and, 5, 78-81 purpose, 78, 95 rates, 77, 239-240 reinsurance, 75-76, 78 California earthquake insurance protection. See also Earthquake insurance; Earthquakes Alquist-Priolo Special Studies Zones Act, 57, 218 antiredlining legislation and, 57 Assembly Bill 13, 75 building codes, 67, 68 capacity of insurers, 89, 203 commercial, 68, 69 coverage, 70, 71, 73-74 damage estimation, 71, 84-86 deductibles, 73-74, 76, 81 demand for coverage, 56-65, 81, 82, 87, 210, 211-212 federal role, 93-94 insurability issues, 90-92 Insurance Department role, 26, 68, 71, 75, 77, 81, 85, 86-87, 88, 94, 246 marketing private insurance, 87-92 premium income, 79-80 probability of earthquakes and, 86 probable maximum loss, 87, 88-89, 94 rate setting, 81, 83-84 reinsurance, 93-94 residential, 68, 69, 81, 82 Residential Earthquake Recovery Fund, 62-63, 73-74 ruling, 87, 226 Read the entire page →
From page 287... ... See also Building codes costs, 2, 104 floodplain, 130, 132 industry role, 9 standards, 20, 130, 132, 158 Correlated risk, 37-38, 39, 40 Cost-benefit analysis, 52-53 Costs of natural disasters, trends, 1-2 Coverage. See also Demand for coverage; Residential coverage; Supply of coverage caps on, 26, 37 commercial property, 230 Read the entire page →
From page 288... ... See also Disaster assistance, federal; Mitigation, natural hazard coordination of, 11-12 current, 10-11 financing recovery, 11-12 frequency of disasters and, 9-13 Disasters. See Natural disasters Read the entire page →
From page 289... ... , 10, 59 worst case, 88, 90, 94, 227 Economic losses direct, 1-2, 4-7, 102 earthquakes, 1, 24, 59 floods, 102 hurricanes, 100, 102 indirect, 5, 102 insured, 1-2, 4-7, 100, 102 property damage, 22 Efficiency, economic, 3, 13, 184, 202 EQECAT, 123 EQE International, 254 Equity, distribution of resources, 3, 13, 184-185, 199 Erosion hazards, 144-146 Exceedance probabilities, 84, 89 Excess-of-loss contracts, 26, 46-47, 75-76, 224 Expected insured loss, 87 Expected utility theory, 51, 52, 53 Exposure coastal development and, 100-102, 103 commercial, 41, 68, 102, 104, 118, 231 -233 Read the entire page →
From page 290... ... . rlnanclng capital market role, 223 National Flood Insurance Program, 138-140 recovery from disasters, 11-12 ~rlre 1nsurance building codes and, 157-158 community grading for, 136, 137138 coverage, 39, 48, 58, 68, 71 history, 19-21, 172-173 on mortgaged property, 22 riots and, 48 smoke damage, 21 Fires. Read the entire page →
From page 291... ... See also Windstorm insurance 291 assessments on insurers, 107, 108, 111, 112, 113, 115, 116-117, 119 capacity, 113, 120, 203 claims adjustment, 201 Commission on Hurricane Loss Projection Methodology, 123, 198, 240 coverage, 5, 114-115, 118 demand for coverage, 114, 117, 120 Department of Insurance, 104-105, 106, 107, 109, 110, 116, 118, 119, 120, 121, 123 exit restrictions, 109-111, 187, 188-189, 200-201 exposure trends, 5, 100-102, 103, 118, 119 Hurricane Catastrophe Fund, 111113, 115 importance, 97 industry concerns, 5 Insurance Council, 123 Legislative Working Group on Residual Property Insurance Markets, 117-118 loss estimation, 102-104, 120 market effects of Andrew, 104-108, 202 new initiatives, 122-123 probable maximum loss, 116 Property and Casualty Joint Underwriting Authority, 13, 106108, 114 rates and rate setting, 106, 109, 114-115, 116, 117, 120, 123 regulatory response, 109 reinsurance, 106, 110, 118, 120122 Residential Property and Casualty Joint Underwriting Association, 113-118 Read the entire page →
From page 292... ... See Mitigation, natural hazard Hazard risk maps coastal flooding, 146 Index Community Rating System creditable activities, 136 floodplain, 55,128, 130, 132, 147 landslides, 30 revisions, 147 seismic, 30, 58, 84, 216 Homeowner's Guide to Earthquake Safety, 64 Homeowners' insurance, 8 coverage, 39-44 multiperil line, 71 prior approval regulations, 197 special purpose, 114-115, 116, 118 H.R. Read the entire page →
From page 293... ... See also Supply of insurance conditions, 6, 209 entry and exit of insurers, 109-111, 138, 184, 186-189, 200-201 failures, 5, 12-13 public policy and, 12-13 regulation of, 176, 179-182, 184185, 186-190, 202-203, 207 Insurance regulation, 9, 11 admitted insurers, 176, 186-189 advisory loss costs, 180-181 alternative risk-financing mechanisms, 190 claims adjustment, 201-202 constraints on, 182-184, 207, 214 coordination of government policies, 204-205, 206-207 and cost of insurance, 184-185 coverage restrictions, 196-197 and demand for insurance, 172 economic rationale, 171-172 entry and exit of insurers, 109-111, 138, 184, 186-189, 200-201 externalities between states, 185 financial regulation and, 191 - 196 functions, 176-182 government role, 173-174, 185, 204-206, 207 market, 176, 179-182, 184-185 186-190, 202-203, 207 nonadmitted and alien insurers, 176-177, 183, 189-190, 195 policy forms, 196-197 principal-agent conflicts and, 177178 prospective loss costs, 180 rates, 33, 109, 159, 173, 179, 180, 184, 185, 197-200, 206 reinsurers, 176-177, 195, 202 research questions, 206 Read the entire page →
From page 294... ... See also Mitigation, natural hazard floodplain management, 125 importance, 6 role in hazard mitigation, 4,11 Landslides, 30,41,70,84 Law and ordinance insurance, 23 Law of large numbers, 24-26 Life and health insurance companies, 22 Lightning, 42 Liquefaction, 30,70,90,91 Lloyd's Coffee House, 18 Lloyd's of London, 18,154,177 London insurance industry, 18 Loss control services, 23 Loss of use coverage, 70 Losses. See also Economic losses; Index Expected insured loss; Probable maximum loss accumulated, 156 aggregate, 89,156 catastrophes, 45-46 collateral, 10 correlated, 38 defined, 23-24 distribution, 38 earthquake, 24,69,72 estimation, 25-26,30,31,32,71, 83,102,104 flood, 54 hurricane, 99, 102,120 index of, 122 limiting, 26 policyholder behavior and, 36-37 reinsurance market, 120 repetitive, 142-143 reporting of, 71 uncompensated, 69 Lubbock, Texas, 42 M Mandatory programs earthquake insurance, 74-75,78, 90-92 federally related mortgages, 161 flood insurance, 140-142,143, 151 regulation of insurance and, 196 197,199,204 Manton, Edward, 21 Manufacturers Mutual, 21 Marine insurance market, 18 Maximum credible probability, 30 McCarran-Ferguson Act, 9, 174,180 McCool, Thomas, 161-162 Mega-catastrophe, 88,90,94,102, 214 Mitigation, natural hazard. Read the entire page →
From page 295... ... . auditing and inspecting property, 217-218 capitalized investments, 199 Community Rating System creditable activities, 137 conditional availability of insurance, 169 cultural contexts for, 53-54, 63-64 defined, 155 federal issues, 161 -162, 164-165 grant programs, 143, 146 incentive-based, 4, 10, 167, 169, 199, 205, 221-222 institutional capacity and, 163-164 insurance industry and, 140, 157162, 164-165, 169, 215-225 integrated approach, 140, 168-169 legislative initiatives, 159-162 multihazard approach, 167 National Committee on Property Insurance building code symposia, 165-167 National Flood Insurance Program, 9, 130-132, 140, 142-146 National Mitigation Strategy, 9, 155 program elements, 216-225 regulatory approaches, 163-164 research needs, 225-228 risk assessment and, 216-217 subsidies and, 3 success determinants, 10, 15, 215216 voluntary approaches, 162-163 Models/modeling of risks applications, 197, 227, 243-244 catastrophe models, 31 -32, 159, 198, 216-217 characterization, 241-243 evaluation and testing, 244-248 295 Florida Commission on Hurricane Loss Projection Methodology, 123, 198, 240 hazard risk, 241-248 simulation, 227-228 safety-first, 213 value maximization, 213 Moral hazard, 36-37, 38, 39, 161 Mortgages geographic lending discrimination, 57 insurance conditions on, 8, 11, 12, 55, 56, 140-142, 149, 150, 161, 248, 249 Multiline, multistate companies, 80 Multiperil policies, 9, 22, 23, 71, 114 Munich Reinsurance Company, 2 Mutual insurance companies, 18, 20, 21, 80, 173 N National Association of Insurance Commissioners, 9, 176, 180, 183-184, 186, 192, 193, 198, 201 National Board of Fire Underwriters, 157-158 National Board of Underwriters, 20 National Committee on Property Insurance, 160, 165-167 National Conference of Insurance Legislators, 224 National Earthquake Hazard Reduction Program, 30 National Fire Protection Association, 20 National Flood Insurance Act of 1968, 127, 138 National Flood Insurance Fund, 138 National Flood Insurance Program acquisition of land and properties, 143, 152-153 Read the entire page →
From page 296... ... 296 administration, 128 claims, 133 and Coastal Barrier Resources System, 146-147 Community Rating System, 135 138, 144 compliance/enforcement issues, 55, 131 coordination of policy decisions, 140 coverage, 41, 55, 56, 99, 143-144, 145, 146-147 creation, 39, 40, 55, 127 demand for coverage, 141, 147 150, 210 Emergency Program, 128 enforcement of requirements, 12 and erosion problem, 144-146 essential elements, 126-127 and federal disaster assistance, 151 153 funding, 138-140 hazard mitigation requirements, 9, 55, 130-132, 140, 142-144, 151, 169 history of, 125 insurance operation, 140 integrated approach, 140 issues confronting, 140-154 lapse rate, 55 legislation, 127, 128 mandatory purchase, 140-142, 143, 162 mapping, 147 Mitigation Grant Program, 143, 146 operating losses, 138-139, 140 participation in, 129, 132, 147-150 and perceptions of risk, 130 policy fees, federal, 140, 143 premiums, 138, 139, 140, 151 private industry role, 126, 134 135, 138, 153-154 Index public knowledge of, 55 rate maps, 55, 128, 130, 132, 136, 146, 147 rates, 128, 132-134, 145 Regular Program, 128 repeatedly damaged structures and, 142-144 risk identification, 128-130, 140, 246 standard of risk, 130 structure of, 128-135 subsidies, 132, 134, 139, 142, 143, 150-151, 162 surcharges, 131 web site, 252 Write-Your-Own Program, 135, 153 National Flood Insurance Reform Act of 1994, 55, 127, 141-142, 143144, 146, 149-150, 153 National Flood Insurers Association, 134 National Mitigation Strategy, 9 National Oceanic and Atmospheric Administration, 246 Nationwide Insurance, 223 Natural Disaster Loss Reduction Committee, 165 Natural disaster syndrome, 6-7 Natural disasters. See also specific types of disasters as public problems, 156-157 stakeholders, 7-9 trends, 2 web sites, 254 Natural Hazards Research and Applications Information Center, 131, 254 Nelson, Bill, 198 Nonadmitted insurers, 176-177, 183, 189-190, 195 o Omnibus Reconciliation Act of 1990, 143 Read the entire page →
From page 297... ... Index p Philadelphia, fire prevention, 19-20 Philadelphia Contributionship for the Insurance of Houses from Loss by Fire, 19, 20 Policyholders behavior of, 36-37 defined, 23 Premiums actual, 28 adverse selection and, 34-36,38, 39 ambiguity of risk and, 33-34,38 assessments on, 79,107,108,112, 160-161,224-225 correlated risk and, 37-38,39 damage estimation and, 85 defined, 23 and demand for insurance, 66,159 discounts, 2,10,135,137,167, 169,199,215 earthquake insurance, 9, 30,39, 79-80 flood insurance, 138,139,140, 151 hurricane insurance, 115 income from, 79-80 inspections and audits and, 35 moral hazard and, 36-37,38,39 pure, 28,29 setting of, 33-38,50,212-213 supply of insurance and, 6 Price-Anderson Act, 224 Price Waterhouse, 151 Principal-agent conflicts, 177-178 Probability of natural disaster, 4,30, 86 Probable maximum loss applications, 26 capacity and, 89,94 earthquakes, 30,88-89,94 hurricanes, 116 297 supply of insurance and, 94 Property at risk, 9 Property Claim Services, 70,99,104 Property-casualty insurance companies, 22-23,79-80 Property insurance, coastal development and, 6 Property insurance, defined, 22 Prospective loss costs, 180 Prospective pricing of risk, 198 Public Protection Grading System, 137-138 Public sector damage, 10, 228 R actuarially fair, 132,161,185, 196,199 building occupancy and, 235 competitive, 180,198 computer modeling, 123 earthquake insurance, 77,83-84, 90 hurricane insurance, 106,109, 114-115,116,117,120,123 location and, 236 National Flood Insurance Program, 132-134 process of setting, 83-84,216 regulation of, 33,109,159,173, 179,180,184,185,188,197200,206 reinsurance, 120 residual market mechanisms, 114115,116,117,120 risk-based, 3,11,90,185 Rating agencies, 194 Real estate sector, role of, 9 Regulation. See also Financial regulation; Insurance regulation Community Rating System creditable activities, 136 Read the entire page →
From page 298... ... 298 natural hazards mitigation through, 163-164 Reilly, Frank, 161 Reinsurance Bermuda, 121 -122 capacity and, 89,202 consolidation among reinsurers, 47-48 earthquake, 75-76,78,160 excess coverage, 202 excess-of-loss treaty, 46-47 facultative contract, 46,118 federal, 93-94,160,161,224-225 geographic diversification, 47 hurricane, 106,110,118,120122 industry, 7 international nature, 47 market conditions, 47-48 monoline catastrophe companies, 121-122 premiums, 160 pro rata treaty, 46 quota share treaty, 46 regulation, 176-177,195,202 role, 26,44,46-48,91 second event coverage, 118 security, 47-48 Replacement cost, 26,91 Report on Floods and Flood Damage, 40 Residential coverage catastrophe losses, 45-46,69 earthquakes, 39,68 floods, 40 hailstorms, 40-41 hurricanes, 41 landslides, 41 lightning, 42 mobile homes, 114-115 supply of, 39-44 tornadoes, 42 tsunamis, 43 Index value of insured exposures, 41, 102,104 volcanic eruption, 44 wildfires, 43 winter storms, 43 Residential Property and Casualty Joint Underwriting Association, 113-118 Residual market mechanisms assessments on insurers, 107,108, 111,112,113,115,119 beach and wind plans, 48-49 defined, 48 evaluation of, 49 FAIR plans, 48 federal, 48 policy questions, 202 rates, 114-115,117 role, 48 state, 113-120,203 Retrofitting, 90,166,167,201 Risk catastrophic, 24-26,190 correlated, 37-38,39,40 identification of, 27-31 level of, 84 management services, 23 pools, 43, 185, 202, 224 retention groups, 190 sharing, see Coinsurance spreading, 18,20-21, 56-57, 90, 161 transfer, 195 type, knowledge of, 34-35 Risk assessment. See also Models/ modeling of risks estimating, 216-221 historical record, 27-28,31 in individual decision making, 5254 and insurability, 27-39,140 National Flood Insurance Program, 128-130,140 Read the entire page →
From page 299... ... Index public-private collaboration, 123, 198 questions about, 217 research needs, 199 and reserves, 194 scientific, 28-30, 31, 91, 197 Risk Management Solutions, 123 Risk perceptions and demand for insurance, 54, 56, 60-61, 63, 64, 66, 149 flood control measures and, 125, 130 and hazard mitigation measures adopted, 64-65, 68 Risk-taking preferences, 54 S Sanibel Island, Florida, 137 Small Business Administration, 11, 152 Small businesses, 237-238 Social costs of disasters, 10, 156-157 Social welfare, 3 Solvency of firms, 173, 176, 177-178, 183, 184, 185, 186, 191-192, 195, 196, 197 Southeast Hurricane Disaster Relief Act of 1965, 126 Southern California Earthquake Center, 86 Spinners Mutual, 21 Stafford Disaster Relief and Emergency Assistance Act of 1988, 10, 151 Standard and Poor rating, 106, 194 Stock insurance companies, 20, 21, 80-81, 173 Structures, classification of, 233-235 Subsidies, 3, 55 cross-subsidies of insurance, 191, 197, 199-200, 202-203 and hazard mitigation, 204 299 National Flood Insurance Program, 132, 134, 139, 142, 143, 150151, 162 Supply of coverage alternative financing methods, 44, 46-49 claims adjustment practices and 201 determinants of, 210 financial regulation and, 193 - 194 and hazard mitigation, 169 insolvencies and, 108 insurability conditions and, 27-39 premium determination, 212-213 probable maximum loss and, 94 regulation and, 172, 184-185, 189, 191, 202, 207 residential, 39-44 by type of insurance, 39-44 Swiss Re, 223 T Tax-exempt bonds, 107, 112, 113 Third-party insurance, 22 Tornadoes, 42 Tsunamis, 43 Tulsa, Oklahoma, 137 U Underwriters, 33-34, 213 Underwriters Laboratories, 20 Underwriting, 84, 89, 134, 190, 200201, 213, 223, 233-235 Uninsured residents and victims, 6 behavior, 37 grants and low-interest loans, 3, 11 special relief measures, 71-72 United States v. South-Eastern Underwriters Ass'n, 174 Upton-Jones program, 143, 145-146 Read the entire page →
From page 300... ... ,24,25,88 Windstorm insurance. See also Florida hurricane insurance protection coverage, 40-41,48-49,97,210 history, 21-22 hurricanes, 41 Index profitability, 39 tornadoes, 42 Winter storms, 43 World Wide Web Sites addresses, 255-259 alternative risk financing, 253 Congressional hazard mitigation measures, 253 disaster finder, 254 Federal Emergency Management Agency, 253 insurance, 23,252 National Flood Insurance Program, 252 natural hazards information, 254 Write-Your-Own Program, 153 Financial Control Plan, 135 Institute for Business and Home Safety Flood Committee, 135 Standards Committee, 135 X Xenia, Ohio, 42 Read the entire page →

From page 285...

... See also Supply of coverage B Barrier islands, 146-147 Beach and wind plans, 48-49 Berkshire Hathaway, 75, 78 Boston Manufacturers, 21 Bottomry, 18 Brokers, 23 Buffet, Warren, 75 Building Code Effectiveness Grading Schedule, 136, 138, 166, 220 Building codes adoption of, 77-78 285

Index Pages 285-300

Index
Pages 285-300