Regulation by Catastrophe Insurance for Climate Risks: A Comparative Study

He, Qihao; Faure, Michael

doi:10.2139/ssrn.3089498

Cited by 3 publications

(4 citation statements)

References 32 publications

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“…The insurers normally base their decision on data obtained from weather station to check the wind speed. A similar study by He and Faure (2017) in United Kingdom showed that there are multiple insurance companies specialized in the greenhouse sector and offers a professional programme of property damage and loss of income insurance. Such insurance package grants comprehensive cover to the horticultural sector throughout United Kingdom (He et al, 2017).…”

Section: Literature Review Capacity Building For Agriculture Insuranc...mentioning

confidence: 90%

“…A similar study by He and Faure (2017) in United Kingdom showed that there are multiple insurance companies specialized in the greenhouse sector and offers a professional programme of property damage and loss of income insurance. Such insurance package grants comprehensive cover to the horticultural sector throughout United Kingdom (He et al, 2017). These insurance firms insure horticultural producers and retail nurseries and offer support in the event of a claim depending on the plant, equipment and the risk situation.…”

Section: Literature Review Capacity Building For Agriculture Insuranc...mentioning

confidence: 90%

“…Furthermore, the study stated that insurance firms offering greenhouse insurance offer tailored insurance protection for different clients to cover the major hazards of hail, storm, flood, fire, earthquake, and landslide. They also offer on-site advice for tailored insurance to limit the risks of their clients' operation Kingdom (He et al, 2017).…”

Section: Literature Review Capacity Building For Agriculture Insuranc...mentioning

confidence: 99%

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Capacity Building for Agriculture Insurance: Lessons From Developed Economies

Kajwang¹

2022

AJA

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Purpose: Agricultural insurance has been offered in some developed economies for more than a century. In contrast, the sector remains underserviced in low and middle-income economies. Penetration of agricultural insurance exceeds 1 percent in developed economies but in low and middle- income countries, the agricultural insurance penetration is less than 0.3 percent. The gap between the penetration of non–life insurance and agricultural insurance increases as development status decreases. The purpose of this research work is to outline lessons from developed economies on how capacity building for agriculture insurance is done. Methodology: Relevant books references and journal articles for the study were identified using Google Scholar. The inclusion criteria entailed papers that were not over five years old. Findings: The study findings showed that insurance company’ in enveloped economies sell crop insurance policies through financial institutions or cooperatives, which are particularly important in marketing crop hail insurance. It was also found that in the developed economies, there is a national climate change policy as a means of capacity building for agriculture insurance. This policy helps the government to plan for training of staff and policymakers on how to advise farmers to take agricultural insurance. This policy also help in enhancement of the administrative and technical capacity of government institutions responsible for handling climate change related issues that affect agriculture insurance Recommendations: The study recommend policymakers in developing countries to focus on imperfections on the pricing of agricultural insurance products. This will help policymakers designing public support programs aimed at reducing the cost of insurance thus developing insurance products that are attractive and affordable to farmers and financially viable and sustainable for insurers. The study also recommend developing countries to embrace modern insurance pricing approaches that are based on the credibility theory such as the experience-based approach. This approach has been promoted in several developed countries to cover systemic risks because it allows for the adjustment of the expected loss based on additional credible information such as insured losses of other products. The study further recommend developing countries to promote insurer- insured partnerships.

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Section: Literature Review Capacity Building For Agriculture Insuranc...mentioning

confidence: 90%

Section: Literature Review Capacity Building For Agriculture Insuranc...mentioning

confidence: 90%

Section: Literature Review Capacity Building For Agriculture Insuranc...mentioning

confidence: 99%

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Capacity Building for Agriculture Insurance: Lessons From Developed Economies

Kajwang¹

2022

AJA

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“…Also, for other types of disasters, comprehensive (mandatory) coverage has been advocated to deal with low demand due to cognitive and informational problems (Kunreuther 1968 ). Several countries, including France, Belgium, Norway and Spain, have now introduced such a mandatory compensation system for (particular) natural catastrophes (see further He and Faure 2018 ). Mandatory coverage therefore undoubtedly has the advantage of curing adverse selection by including all risks (good and bad) into the mandatory system; via premium and risk differentiation the moral hazard problem could be cured as well, “Only when government requires the purchase of insurance directly or indirectly, or when insurers adopt coverage terms akin to paradigmatic command-and-control regulation, does it make sense to label these techniques ‘regulation’” (Abraham and Schwarcz 2023 ).…”

Section: Possible Solutions Within the Legal Frameworkmentioning

confidence: 99%

The possibilities and limits of insurance as governance in insuring pandemics

Faure

2023

Geneva Pap Risk Insur Issues Pract

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Insurance can, as has clearly been indicated in the literature, play an important role in dealing with catastrophe risks, not only as a compensation mechanism but also as a mechanism to influence the behaviour of the insured. It is the concept known as ‘insurance as governance’. However, we argue that there are limited possibilities for this role as far as the insurance of pandemics is concerned. The traditional technical tools, such as risk-based pricing, are difficult to apply. In addition, there may, ab initio, be serious problems in insuring pandemics within one of the main conditions of insurability (controlling moral hazard through an effective risk differentiation). One remedy that is traditionally applied, more particularly for natural catastrophes, is mandatory coverage. Furthermore, the capacity problem might potentially be solved through a multilayered approach in which, in addition to insurance and reinsurance, the government could also take up a role as reinsurer of last resort. That would also have the major advantage of stimulating market solution (and potentially providing incentives for the mitigation of damages), which clearly fails in a model where the government simply bails out operators. Finally, one important regulatory intervention is that insurers should be better informed than was apparently the case during the last pandemic about exactly which type of risks are covered and which are not.

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Management of Contingent Liabilities in Turkey

Tosunoğlu

2020

Accounting, Finance, Sustainability, Governance &Amp; Fraud: Theory and Application

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Regulation by Catastrophe Insurance for Climate Risks: A Comparative Study

Cited by 3 publications

References 32 publications

Capacity Building for Agriculture Insurance: Lessons From Developed Economies

Capacity Building for Agriculture Insurance: Lessons From Developed Economies

The possibilities and limits of insurance as governance in insuring pandemics

Management of Contingent Liabilities in Turkey

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