A 6 page research paper that discusses earthquake insurance. Earthquake insurance is of vital importance to those sections of the country that are prone to this catastrophic occurrence. It is insurance that provides the necessary financial "safety net" that, in the event of a catastrophic quake, helps the affected areas to rebuild their homes, businesses and economies. This report details how some homeowners and business do not have insurance and why, and also discusses possible alternative positions to the traditional insurance approach, which aid insurers in retaining solvency and offering earthquake insurance on a broader basis. The writer argues in favor of policy proposals that encourage insurers to build large reserves that can be used in the event of catastrophic events as being a logical step in societal preparedness. This research includes an executive summary and concludes with a summary. Bibliography lists 3 sources.
Name of Research Paper File: D0_kheins.rtf
Unformatted Sample Text from the Research Paper:
necessary financial "safety net" that, in the event of a catastrophic quake, helps the affected areas to rebuild their homes, businesses and economies. The following report details how some homeowners
and business do not have insurance and why, and also discusses possible alternative positions to the traditional insurance approach, which aid insurers in retaining solvency and offering earthquake insurance on
a broader basis. The writer argues in favor of policy proposals that encourage insurers to build large reserves that can be used in the event of catastrophic events as
being a logical step in societal preparedness. Background Natural catastrophes can place tremendous financial demands on individual households, businesses and the insurance industry, in addition to perpetuating significant
loss of life. Forecasting the timing and severity of such events is extremely difficult and when insurers suffer large losses due to a catastrophic events, such as an earthquake, it
can threaten the solvency of the insurer (GAOR, 2005). Often, insurers respond to the occurrence of such events by cutting back on their coverage or substantially increasing the premiums paid
by policyholders (GAOR, 2005). For example, after Hurricane Andrew hit southern Florida in 1992, many insurance companies either raised their premiums or stopped offering catastrophic coverage in that state completely
(GAOR, 2005). When this occurs it not only severely hinders rebuilding in the region, but also the lack of available insurance seriously hinders any future development of the area. Similar
reactions from insurers took place in California after the Northridge quake of 1994 (GAOR, 2005). The Northridge earthquake caused $15 billion in insured losses. This caused a financial crisis in
the insurance industry that caused the state to establish its state-directed insurance pool, California Earthquake Authority (CEA)(Bowers, 2005). However, there has not been a large earthquake in California since