Disaster insurance swaps

Catastrophe insurance has emerged as a pivotal national strategy for mitigating large-scale risks, particularly natural disasters, and enhancing societal resilience. China, with its vast territory, dense population, and frequent exposure to catastrophes, has progressively integrated catastrophe insurance into its social governance framework to bolster disaster prevention, economic compensation, and post-disaster recovery. This paper explores China’s evolving approach, emphasizing the necessity of establishing a robust catastrophe insurance system amid escalating climate risks and fiscal pressures. Catastrophe Insurance ‘pilot’ projects in China have demonstrated tangible progress in loss compensation, public awareness, and collaborative governance models. However, challenges persist, including technical constraints in risk modeling, market distortions from non-actuarial pricing, institutional gaps in fiscal governance, and stagnant product innovation. To address these issues, this study proposes targeted countermeasures: strengthening legislative frameworks, optimizing collaborative governance, refining risk-sharing mechanisms, leveraging advanced technologies, and cultivating public risk awareness through nationwide education. By aligning catastrophe insurance innovation with governance modernization, China aims to enhance systemic resilience, foster multi-sectoral coordination, and achieve the dual goals of economic stability and societal harmony. This study underscores the critical role of catastrophe insurance in advancing the "Safe China" initiative and offers insights for global policymakers seeking to balance state intervention with market-driven solutions in disasters and risks.

This book is about the critical yet little-known work of “Protection Gap Entities” (PGEs), in disaster protection. Disasters, such as floods, earthquakes, and terrorist attacks, are becoming more frequent and more intense. These disasters threaten not only life, but also livelihood, causing the loss of homes and jobs that can scar the lives of those affected. Disaster insurance, by providing funds for reconstruction, plays an essential role in limiting these consequences of disaster. Yet disaster insurance is under threat in many contexts, becoming unaffordable or being withdrawn entirely. In response, many countries have established PGEs, organizations and schemes to keep disaster insurance available. PGEs rebalance the tensions (paradoxes) at the heart of insurance about who controls the insurance market, how much is known about the risk, and who should pay for protection. Using evocative examples from our research into 17 PGEs across 49 countries over five years, we explain how PGEs establish, maintain, and expand disaster insurance, and their role in the wider landscape of disaster resilience. We conclude by reimagining disaster insurance as a key tool in an ecosystem that has societal protection from disaster at its heart. Our book is accessible for those who have never heard of PGEs or thought about disaster insurance. We explain why PGEs are vital in adapting to an increasingly disaster-prone world. Our paradox lens on the tensions PGEs face will also provide an alternative, thought-provoking view for risk professionals working with the challenges of insuring disasters.

This paper suggests that catastrophe insurance schemes should be considered within the framework of public goods and commons, and as a form of polycentric organization whose success depends on collective action. The first section situates catastrophe insurance within the "state withdrawal hypothesis:" while neoliberalism is usually understood as promoting a shift from social and solidary insurance programs to private, market-oriented ones, this does not apply to catastrophe insurance. The second section shows that one of the reasons for the persistence of public intervention in catastrophe insurance is its public good dimension: market best practice would indeed promote risk-based premiums leading to unaffordability issues and the disappearance of the good. Such insurance gaps are perceived as a "public bad." Catastrophe insurance is thus a hybrid public good: it benefits from a large number of users and is threatened by their exclusion. The final section highlights the polycentricity of insurance systems and the challenge this poses to collective action for the sake of prevention.

Keywords: risk perception, risk attitude, catastrophic risk, insurance, farm characteristics, farmer personal characteristics, utility-efficient programming, arable farming, dairy farming Catastrophic risks can cause severe cash flow problems for farmers or even result into their bankruptcy. To cope with catastrophic risks farmers need to apply risk management strategies. Insurance is a frequently used instrument to cover catastrophic risks. The main goal of the research is to analyse the actual farmer's behaviour (descriptive approach) and to model the impact of catastrophe insurance purchase (prescriptive approach). Concerning insurance decisions to cope with catastrophic risks, the impact of farmer personal and farmer characteristics is important to consider. In this research, the impact of farmer's personal risk characteristics on catastrophe insurance purchase was mainly addressed. These characteristics are the farmer's personal risk perception and his risk attitude. The descriptive approach evaluated the impact of farm and farmer personal characteristics on actual insurance purchase in arable farming as well as in dairy farming. The first part of the descriptive analysis focused on the purchase of several general types of insurance (i.e., damage, disability, health and liability insurance and a combination of previous insurance covers). In the second part, more specific insurance covers were analysed (hail, storm, brown rot, hail-fire-storm insurance for buildings, disability insurance, and insurance against epidemic animal disease outbreaks). The results showed that farm and farmer's personal characteristics (including risk perception and risk attitude) had a significant impact on actual (catastrophe) insurance purchase. In the prescriptive analysis, the decision making problem describing how arable farmers can cope with catastrophic yield risks was modelled. The analysis focused in more detail on risk perception and risk attitude. For this purpose the results obtained from single-crop two-state risk models were compared with the results obtained from multi-crop multi-state models (utility-efficient portfolio approach). The preferred options whether the decisions to insure and not to insure in terms of utility accounted either for farm income or terminal wealth. The analysis showed that if a farmer makes decisions only in terms of an income-based utility function he is more prone to purchase catastrophe insurance. Those decision-makers who perceived that a risk would relatively seldom occur were less inclined to insure and self-insurance would be preferable. However, if insurance decisions are made only on the basis of the single-crop two-state approach, they may differ from portfolio results because of alternative risk reducing options such as a diversification are not taken into account.

Yang, W., 2020. Influence of time and space analysis of marine economy on catastrophe insurance risk assessment. In: Bai, X. and Zhou, H. (eds.), Advances in Water Resources, Environmental Protection, and Sustainable Development. Journal of Coastal Research, Special Issue No. 115, pp. 583-586. Coconut Creek (Florida), ISSN 0749-0208.Catastrophe insurance is the risk of huge property loss and serious casualties caused by natural disasters. Through catastrophe insurance system, risks can be dispersed. Catastrophe is characterized by a low frequency of occurrence. But once it happens, its impact is generally beyond people's expectations. Among them, maritime catastrophe is the highest risk. Therefore, it is necessary to make early warning and assessment on the risk of marine catastrophe insurance. In the traditional methods of early warning and estimation, due to the divergence of the characteristic parameters of the model, the estimation of the influence of the parameters caused by the economic characteristics is insufficient. So the accuracy of the model is low. In this paper, the maritime catastrophe risk is pre-warning and assessment by using the spatial-temporal characteristics of marine economy. The model integrates support vector machine and neural network algorithm, and can deeply mine the spatial-temporal differentiation characteristics of marine economy. Therefore, the risk assessment model of catastrophe insurance has been optimized. The experimental results show that the model proposed in this paper can improve the risk assessment accuracy of catastrophe insurance, and has a certain reference value for the risk early warning of catastrophe insurance.

The existence of disaster insurance in Indonesia is particularly important for disaster-prone areas. In recent years, only 2.96% of 64 million MSMEs have disaster insurance. This is because the existing disaster insurance scheme has not fully met the expectations of MSMEs regarding its premium value, its claims mechanism and MSMEs financial capability. This research seeks to explore the factors that influence MSMEs to own disaster insurance, by using quantitative analysis of Panel Fixed Effects Model as the first model and Probit Models as the second and third models as well as qualitative analysis. The result will be utilized to formulate the appropriate disaster insurance product which optimize insurance features based on MSMEs’ demand, encourage regulatory support and improve government funding capacity. Indonesia is currently facing approximately IDR19.75 trillion (USD1.4 billion) financing gap to cover the loss caused by disasters hence, there is also a need to create a high- level financing scheme to cover the gap.

ABSTRACTDisaster insurance is gaining prominence as a tool to address climate‐induced loss and damage in developing countries. Despite ongoing efforts to pilot disaster insurance in Malawi, adoption by households remains low. This study examines factors influencing the adoption of disaster insurance in Malawi, a country highly susceptible to climate‐related impacts. Drawing on qualitative research across seven districts and guided by the Diffusion of Innovations Theory, the study identifies key opportunities and barriers to insurance uptake. It stresses the importance of awareness raising, integration with existing services, and partnerships in promoting insurance adoption. Additionally, the study explores novel approaches, including communities applying disaster insurance knowledge to design local risk pooling mechanisms, integrating insurance into existing projects, and designing hybrid indices for risk assessment and premium calculation. These offer insights into the potential synergies between formal insurance schemes and grassroots initiatives. However, challenges such as limited awareness, affordability constraints, absence of enabling policy and legal frameworks, and capacity gaps in the local insurance industry hinder widespread adoption. Addressing these barriers requires targeted interventions, including awareness campaigns, innovative financing mechanisms, and policy reforms. The study contributes to the debate on disaster insurance in low‐income countries, underscoring the need for reforms to build resilience.

After the Wenchuan earthquake (magnitude 7.9, May 12, 2008), intensive debates on how China should establish a natural disaster insurance system were initiated among researchers, policymakers, and insurance professionals. Our focus was the social aspects of disaster insurance, explored in China through a nationwide survey. Our questionnaires investigated people's risk awareness, insurance acceptance, their opinions on governmental measures for disaster management, and their willingness to pay for disaster house insurance. We analyzed the results at both regional and individual scales. We found that the integrated hazard index and respondents' experience of insurance (considered objective factors), and their opinions on the importance of insurance and government responsibility (considered subjective factors) showed strong correlation with the regional overall acceptance of disaster insurance. An individual's decision to participate highly depended on his/her experience of both insurance and disaster and his/her opinion on the importance of insurance as a coping mechanism. Respondents from poverty-stricken or less-developed counties were not necessarily more reluctant to accept natural disaster insurance, though they exhibited relatively lower ability to afford insurance. In general, respondents had correct perceptions of natural disasters in their areas; however, people from regions with a greater multihazard threat showed less willingness to accept disaster insurance because they tended to expect the government to undertake to cover losses and considered insurance to be less important. People's willingness to pay for an assumed disaster house insurance was also investigated and analyzed. We consequently discuss the policy implications for developing a disaster insurance system in China.

This study aims to improve the disaster insurance system by examining issues related to compulsory insurance against social disasters, legal problems, and operational cases in major overseas countries. Korea operates about 30 types of disaster insurance, but there is a lack of prior reviews when introducing disaster insurance, so disaster insurance is continuously expanded. In addition, compared to major overseas countries, the insurance contract method is uniform and the management and supervision of insurance are insufficient. Therefore, when disaster insurance is introduced, it is necessary to accompany a professional review to determine if it is sufficiently helpful to the public interest, and it is essential to strengthen the management and supervision of insurance operations. In addition, to alleviate resistance to insurance purchases without infringing on individual freedom of contract, various insurance subscription methods should be devised, and it is necessary to strengthen liability for social disasters and to encourage the purchase of disaster insurance policy.

The risk of climate disasters has spurred increased interest in public policies that help expand the number of households with disaster insurance, particularly for financially vulnerable populations. In recent years, local governments, concerned with their community’s resilience to climate disasters, have started to consider insurance programs as part of their adaptation strategies. However, we do not yet have a robust body of research that shows if, and how, expanded insurance take-up among households affects community-wide recovery after a climate disaster. Filling this disaster insurance research gap will better equip public sector leaders to assess if investments in insurance programs can further community resilience goals and when disaster insurance is an appropriate climate adaptation tool. In this article, we assess the state of empirical evidence through existing frameworks of community recovery and put forward an agenda for future research that is attuned to local policy needs. Key policy insights: There is increasing interest by policymakers in expanding the number of households with disaster insurance to provide financial protection in the face of increasing climate risks, but little evidence exists on how household-level insurance affects community-level resilience outcomes. Expanded research on this topic could support local decision-makers in designing effective and efficient policies to support community recovery from climate extremes. Future research should focus on testing more holistic disaster recovery measures and downscaling global and national research to the local scale. Emerging pilot insurance programs and experimental policies offer novel opportunities to study impacts at the local level.

Catastrophe insurance reflects its necessity in the disaster environment and economic construction needs. Guangdong, Hong Kong, and Macao, as an integrated mechanism of economic linkage in the Bay Area of China, must start from a unified and centralized perspective in response to catastrophe risks and build an integrated catastrophe commercial insurance system. In this paper, the authors have discussed regarding the optimization of the current development path of commercial catastrophe insurance, and jointly building a catastrophe mechanism with “system freedom and diversified insurance types” in the form of linkages between banks and insurance companies to ensure that the catastrophe insurance commercial systems form pilot areas with demonstration effects.

Effect of catastrophe insurance on disaster-impacted community: Quantitative framework and case studies

Catastrophe refers to natural disasters that caused huge damages to people's lives and property. Catastrophe insurance is a form of insurance through which the risks caused by natural disasters like earthquakes, hurricanes, tsunamis, floods can be dispersed. In recent years, the importance of catastrophe insurance has brought to the forefront of many countries and the catastrophe insurance products and systems are improving as the enormous losses caused by catastrophic natural disasters. China's economic losses caused by natural disasters are also very serious, but there is no catastrophe insurance has been established. To establish an insurance as the basis?variety of social assistance and government financial support for disaster relief system is currently respond to important tasks of catastrophic natural disasters.

A hallmark of information technology use in disaster management is the wide adoption of complex information systems for risk assessment, portfolio management, and ratemaking in catastrophe insurance. Whereas the importance of catastrophe insurance to disaster preparedness is beyond dispute, catastrophe insurers are increasingly reckoning with the potential impact of inequality in insurance practices. Historically, the presence of inequalities in insurance, from redlining to pricing disparity, has had a devastating impact on minority communities. Even recently, people living in predominantly African American communities can still be charged more for the same insurance coverage than people living in other communities. Whereas the fairness of insurance ratemaking is studied in general, we identify a unique challenge for catastrophe insurance that sets it apart from other lines of insurance. Drawing upon the recent advances in machine learning for fair data valuation, we reveal striking connections between the two seemingly unrelated problems and lean on insights from machine learning to study the fairness of ratemaking methods for catastrophe insurance. Our results indicate the potential existence of disparate impact against minorities across existing methods, pointing to a unique solution that can satisfy a few commonly assumed properties of fair ratemaking for catastrophe insurance.

The purpose of this paper was to improve catastrophe insurance level. Firstly, earthquake predictions were carried out using mathematical analysis method. Secondly, the foreign catastrophe insurances’ policies and models were compared. Thirdly, the suggestions on catastrophe insurances to China were discussed. The further study should be paid more attention on the earthquake prediction by introducing big data.