NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Evolving Market for Catastrophic Event Risk

Kenneth A. Froot

NBER Working Paper No. 7287
Issued in August 1999
NBER Program(s):   AP

This paper discusses the recent changes in the market for catastrophe risk. These risks have traditionally been distributed through the insurance and reinsurance systems. However, because insurance companies tend to share relatively small amounts of their cat exposures and because insurance companies' capital is threatened by large event, these risks are now being shared partly through the capital markets. In looking to likely future developments, the paper enumerates five key ingredients that successfully structured cat instruments are likely to share: retentions should be substantial; layers of protection should not be too high; dollar amounts of risk transfer should not be too small; loss triggers should be beyond cendent control; and loss triggers should be symmetrically transparent.

download in pdf format
   (415 K)

email paper

This paper is available as PDF (415 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w7287

Published:

  • Froot, Kenneth. “The Evolving Market for Catastrophe Event Risk." Risk Management and Insurance Review 2, 3 (Fall 1999): 1-28.
  • Figlewski, S. and R. Levich (eds.) Risk Management: The State of the Art. Kluwer Academic Publishers, 2001.

Users who downloaded this paper also downloaded these:
Froot w8110 The Market for Catastrophe Risk: A Clinical Examination
Froot w7286 The Market for Catastrophe Risk: A Clinical Examination
Froot w10184 Risk Management, Capital Budgeting and Capital Structure Policy for Insurers and Reinsurers
Lakdawalla and Zanjani w12742 Catastrophe Bonds, Reinsurance, and the Optimal Collateralization of Risk-Transfer
Dale and Krueger w7322 Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us