TY  - JOUR
AU  - Viscusi,W. Kip
AU  - Born,Patricia
TI  - The Catastrophic Effects of Natural Disasters on Insurance Markets
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12348
PY  - 2006
Y2  - July 2006
UR  - http://www.nber.org/papers/w12348
L1  - http://www.nber.org/papers/w12348.pdf
N1  - Author contact info:
W. Kip Viscusi
Vanderbilt Law School
131 21st Avenue South
Nashville, TN 37203-1181
Tel: 615/343-7715
E-Mail: kip.viscusi@vanderbilt.edu

Patricia Born
Florida State University 
E-Mail: pborn@cob.fsu.edu
AB  - Natural catastrophes often have catastrophic risks on insurance companies as well as on the insured. Using a very large dataset on homeowners%u2019 insurance coverage by state, by firm, and by year for the 1984 to 2004 period, this paper documents the positive effect on losses and loss ratios of both unexpected catastrophes as well as large events that the authors term %u201Cblockbuster catastrophes.%u201D Insurers adapt to these catastrophic risks by raising insurance rates, leading to lower loss ratios after the catastrophic event. There is a widespread event of unexpected catastrophes and blockbuster catastrophes that reduces total premiums earned in the state, reduces the total number writing insurance coverage in the state, and leads to the exit of firms from the state. Firms with low levels of homeowners%u2019 premiums are most adversely affected by the catastrophes.
ER  -