TY  - JOUR
AU  - Jaffee,Dwight
AU  - Kunreuther,Howard
AU  - Michel-Kerjan,Erwann
TI  - Long Term Insurance (LTI) for Addressing Catastrophe Risk 
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14210
PY  - 2008
Y2  - August 2008
UR  - http://www.nber.org/papers/w14210
L1  - http://www.nber.org/papers/w14210.pdf
N1  - Author contact info:
Dwight Jaffee
Haas School of Business
University of California
Berkeley, CA  94720-1900
Tel: 510/642-1273
Fax: 510/643-7441
E-Mail: jaffee@haas.berkeley.edu

Howard Kunreuther
Operations and Information Management
The Wharton School
University of Pennsylvania
3730 Walnut Street, 500 JMHH
Philadelphia, PA 19104-6366
Tel: 215/898-4589
Fax: 215/573-2130
E-Mail: kunreuther@wharton.upenn.edu

Erwann Michel-Kerjan
The Wharton School
University of Pennsylvania
Center for Risk Management
3730 Walnut Street, 556 JMHH
Philadelphia, PA 19104-6340
Tel: 215-573-0515
Fax: 215-573-2130
E-Mail: erwannmk@wharton.upenn.edu
AB  - This paper proposes long-term insurance (LTI) as an alternative to the standard annual homeowners policy using lessons from the mortgage market as a benchmark. LTI has the potential to significantly increase social welfare by reducing insurers’ administrative costs, lowering search costs and uncertainty for consumers and providing incentives for long-term investment in mitigation measures to protect property. A two-period model illustrates situations that would make a long-term contract attractive to both insurers and consumers under competitive market conditions.
ER  -