Journal article
Increased Hurricane Risk and Insurance Market Responses
Journal of insurance regulation, Vol.24(2), p.3
12/01/2005
Abstract
The severe hurricane seasons of 2004 and 2005 and the resulting losses are prompting insurers to reassess their risk and business strategies in Southeastern states. This article examines recent trends in the affected homeowners insurance markets and discusses how these markets are likely to change in response to the reassessment of hurricane risk. Our examination of past market trends and current market conditions suggests that significant market restructuring is likely to occur as some insurers with large numbers of exposures will retrench and other insurers step in to fill the gap. The price of insurance also will increase significantly in high-risk areas, although the magnitude and pace of rate hikes will depend on insurers' risk assessments and regulatory approvals. Greater pricing freedom will allow insurance markets to reach a new equilibrium more quickly, but regulators will also have to contend with strong political resistance to large rate hikes. The supply and price of reinsurance will be an important factor affecting market adjustments as a proposal to establish a federal catastrophe reinsurance program undergoes public debate. [PUBLICATION ABSTRACT]
Details
- Title: Subtitle
- Increased Hurricane Risk and Insurance Market Responses
- Creators
- Martin GraceRobert KleinZhiyong Liu
- Resource Type
- Journal article
- Publication Details
- Journal of insurance regulation, Vol.24(2), p.3
- Publisher
- National Association of Insurance Commissioners
- ISSN
- 0736-248X
- Language
- English
- Date published
- 12/01/2005
- Academic Unit
- Finance
- Record Identifier
- 9984701247302771
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