Catastrophe Risk: U. S. and European Approaches to Insure Natural Catastrophe and Terrorism Risks
DIANE Publishing, 2005 - 74 pages
Natural catastrophes & terrorist attacks (NCTA) can place enormous financial demands on the insur. industry (II), result in sharply higher prem. & substantially reduced coverage. There are mechanisms to increase the capacity of the II to manage these events. This report: (1) provides an overview of the II's current capacity to cover NCTA risks & discusses the impacts of the 2004 hurricanes; (2) analyzes the potential of catastrophe bonds -- a security issued by insurers & reinsur. & sold to instit'l. investors -- & tax-ded. reserves to enhance private-sector capacity; & (3) describes the approaches that 6 European countries have taken, incl. whether these countries permit insurers to use tax-deductible reserves for such events. Tables.
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2004 hurricane season According accounting firm official allow insurance Appendix Bermuda billion building codes catastrophe and equalization catastrophe and terrorism Catastrophe Bond Market Catastrophe Model catastrophe reserves catastrophic events Consorcio deductible earthquake insurance enhance industry capacity equalization reserves equity capital establish tax-deductible reserves Extremus federal FHCF financial exposure financial statements Flood Insurance Florida four hurricanes France funds GAAP GAREAT homeowners Hurricane Andrew increase industry participants industry's institutional investors insurance and reinsurance insurance association insurance companies insurance industry officials insurance market insurance policies insurance regulators Insurance Services Office insured losses insurer's issued liability limited NAIC National Terrorism Insurance natural catastrophe coverage natural catastrophe risk nonindemnity-based pay claims policyholders Pool potential primary insurers private insurers property insurance property-casualty insurance purchasing reinsurance rating agencies regulatory reinsurance coverage September 11 attacks Spain SPRV statutory accounting Switzerland terrorism coverage Terrorism Insurance Programs terrorism risk terrorist attacks TRIA U.S. dollars United Kingdom
Page 50 - The IASB is committed to developing in the public interest a single set of high quality, understandable and enforceable global accounting standards that require transparent and comparable information in general purpose financial statements.
Page 4 - Most states do not require companies to provide ownership information at formation or in periodic reports. Similarly, states usually do not require information on other individuals who manage a company, including corporate officers and directors and LLC managers, on company formation...
Page 3 - Act, or any foreign bank or savings and loan association or equivalent institution, acting for its own account or the accounts of other qualified institutional buyers, that in the aggregate owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with...
Page 51 - The objective of general purpose financial statements is not to enhance solvency but to provide information that is useful to a wide range of users for economic decisions. Moreover, the recognition of provisions does not, by itself, enhance solvency. However, if the objective of financial statements were to enhance solvency and such provisions were an appropriate means of enhancing solvency, it would follow that the insurer should recognise the entire provision immediately...
Page 39 - acts of terrorism' means acts of persons acting on behalf of, or in connection with, any organisation which carries out activities directed towards the overthrowing or influencing, by force or violence, of Her Majesty's government in the United Kingdom or any other government de jure or de facto.
Page 8 - Insurers and reinsurers are sublect to "moral hazard," which is "the incentive created by insurance that induces those insured to undertake greater risk than if they were uninsured, because the negative consequences are passed through to the insurer.
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Page 28 - ... contacted said that the liquidity of the catastrophe bond market has improved. Moreover, the catastrophe bond market has generally been limited to coverage of natural disasters because the general consensus of insurance and financial market participants we contacted was that developing catastrophe bonds to cover potential targets against terrorism attacks in the United States was not feasible at this time. In contrast to natural catastrophes, where a substantial amount of historical data on the...