TY  - JOUR
AU  - Froot,Kenneth A.
TI  - The Evolving Market for Catastrophic Event Risk
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7287
PY  - 1999
Y2  - August 1999
UR  - http://www.nber.org/papers/w7287
L1  - http://www.nber.org/papers/w7287.pdf
N1  - Author contact info:
Kenneth A. Froot
Graduate School of Business
Harvard University
Soldiers Field
Boston, MA 02163
Tel: 617/495-6677
Fax: 617/496-7357
E-Mail: kfroot@hbs.edu
AB  - 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.
ER  -