How could a private insurer that provides disaster insurance justify the following statement: “The private insurance industry feels that it cannot continue to provide coverage against hurricanes and earthquakes as it has done in the past without opening itself up to the possibility of insolvency or a significant loss of surplus.”
The private insurance industry feels that it cannot continue to provide coverage against hurricanes and earthquakes as it has done in the past without opening itself up to the possibility of insolvency or a significant loss of surplus and these kind of apprehensions has emerged due to a series of natural disasters that had occurred in US since 1989 which indeed resulted in exceptional insured losses.
Prior to incidence of Hurricane Hugo in 1989 insured losses in that year were over $4 billion and furthermore insurance industry had never experienced any losses from a particular disaster more than $1 billion however since that time it had to suffer ten disasters resulting in huge amount of losses for the insurance companies.
Thus it was very crucial and significant for insurance companies to develop an approach in order to efficiently and effectively assess and estimate the responsibility of insurance and other policy instruments towards administering the disastrous and calamitous danger and threat problems.
Thus it was very important to elucidate how the conventional reinsurance instruments were limited in their capability to cover the losses. Furthermore it was also important to examine and evaluate the pooling measures that state and federal governments indeed needs to adopt in order to facilitate the need for fresh sources of funds from the capital markets.
Thus it was very crucial and vital to stress on the significance of identifying and acknowledging the decision procedure to be adopted by the key interested parties concerned with disastrous and calamitous losses and their communication and dealings with each other. in order to facilitate them with an objective to minimize their losses suffered.
Furthermore it was important to build up significant proposals with concrete and substantial frameworks facilitating to explore fresh and novel alternative policies and approaches, putting into use the latest available technologies, developing significant database and strategies which indeed can facilitate to scrutinize and evaluate the catastrophic risks.
Get Answers For Free
Most questions answered within 1 hours.