Swiss reinsurance: catastrophe happens to promote the ... - insurance

A few days ago, the Swiss reinsurance in research report, more and more government departments through the use of commercial insurance skills and insurance industry growing capital strength, to accept insurance catastrophe losses as well as many other types of risk. Earlier this year, Japan earthquake disaster caused by damage to property worth more than 200 billion dollars, and commercial insurance coverage of the insured amount to only $30 billion. In contrast, Christchurch in New Zealand in the earthquake, property damage totaling us $12 billion, and commercial insurance company will compensate pays about $9 billion.

Public infrastructure huge potential for Swiss re in the study found that the central government to government property and main government activities, and self-preservation smaller government department is through the commercial insurance way, and other government departments to the risk of nonzero deductible. Most countries and regions and the government is also to roads, Bridges and buildings and government property skins. ?Although many government taking captive or nonzero deductible way, but governments there are still many the chance to the commercial insurance skills and growing capital strength to effectively share risk, and keep just really can?t cast parts.? Swiss reinsurance economist, the government involved in commercial insurance market, ?the authors RudolfEnz said. In this way, will risk for budget costs and expenses and commercial insurance company can share the influence of adverse events.

Enz says: ?from country to country and the district government is reconsidering catastrophe insurance coverage.? He said: ?Japan, Turkey and Taiwan has already issued a creative earthquake catastrophe plan. Mexico issued MultiCat bonds to gently to the influence of the disaster annual budget. The plan makes the Mexican government can through each quarter payment to the investor money in exchange for as much as $290 million earthquake and hurricane insurance.?

These solutions of a common features, is through the commercial insurance company and capital market to buy some extra security, where there is a catastrophe, governments can be used as a barrier, the last of the risks to be reduced. This practice became more and more necessary, because of the financial market of investors are willing to lend to the government?s limited amount, especially in the financial situation tense situation, and recent sovereign debt crisis will have one way performance without involuntary discharge of urine.

Insurance subsidies unintended consequences, some government study found that in areas prone to natural disasters have subsidies of insurance, if these insurance in the private market access will be much more expensive. This makes more dangerous areas of buildings. ?The subsidies can lead to unexpected consequence, forcing some live in the mainland or higher tax payers for expensive, in the seashore of all the people building insurance provide subsidies. This summer if there is a destructive hurricane will give the government provide these subsidies bringing heavy pressure.? Enz said. His advice: ?for those governments cancel commercial insurance company willing to provide insurance give subsidies, which can save are increasingly scarce government resources, to invest in those in catastrophe happens to help reduce the loss of infrastructure, and only to really cannot protect risk provided protection.?

According to information, governments compulsory purchase business to ensure that the danger of get compensation this regulation has a long history. For example, in most countries motor vehicle liability insurance is mandatory. ?People may not have savings or borrowing to pay for the damages ability because accident caused the badly hurt.? Enz said. Insurance companies to guarantee slip holder of centralized risk, in order to make no associated event diversity. Through the mandatory insurance, the government can ensure that damages to the needs of the victims to be big enough. In addition, pay insurance costs also encourage people to reduce risk behavior.

Source: http://youandmeinsurance.com/2011/09/swiss-reinsurance-catastrophe-happens-to-promote-the-government-involved-in-commercial-insurance-market/

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