Prediction for national catastrophe fund

Abstract

United States of America (US) Congress is considering a bill 'H.R. 2555: Homeowners' Defense Act of 2010' to form National Catastrophe Risk Consortium, one of whose functions is to fund a National Catastrophe Fund to help public and insurance companies meet the liability claims from hurricane, fire, and blizzard. However, before the act is enacted into law by US Congress, the bill has to pass through House Financial Services Committee which takes into account the projected costs, disbursements, and the amount required to be appropriated for the task and its source. Using data for three catastrophes for the last 100 years, the 2011 claims for hurricane, fire, and blizzard in United States of America are estimated. For predicting acres burned and economic damage due to blizzards, a trend analysis and linear regression were carried out using Excel and GraphPad Prism. Poisson distribution was used to model hurricanes. The estimates for the different catastrophes are based on a 95% confidence interval. The cost to the National Catastrophe Fund for the liabilities of fire, blizzard, and hurricane comes to over 2 billion. Of this, the bulk cost arises from fire damage, followed by hurricane damage and blizzard damage.

Insuring homes against extreme weather events: a systematic review of the research

“…For example, Calis et al (Calis et al 2017) find that micro-insurance was successful in reducing the impact on Indian households of Cyclone Phailin in 2013. The opportunities and limitations of Catastrophe funds, often used by insurers and governments as ways to reinsure against liability for household insurance after extreme weather events (Aggarwal 2012;Grove 2012;Medders and Nicholson 2018) are also discussed in this theme. While these kinds of mechanisms offer new ways of off-setting financial risk, questions remain about the political effects of a mechanism in which uncertainty is rationalized as catastrophe in order to be leveraged as capital (Grove 2012).…”