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1 – 10 of 15DAVID C. CROSON and HOWARD C. KUNREUTHER
This article examines how reinsurance coupled with new financial instruments can expand coverage to areas exposed to catastrophe losses from natural disasters, and demonstrates…
Abstract
This article examines how reinsurance coupled with new financial instruments can expand coverage to areas exposed to catastrophe losses from natural disasters, and demonstrates how reinsurance and the catastrophe‐linked financial instruments can be combined to lower the price of protection from its current level. A simple example illustrates the relative advantages and disadvantages of pure catastrophic bonds and pure indemnity reinsurance in supporting a structure of payments contingent on certain extreme events occurring. The authors suggest ways to combine these two instruments using customized catastrophe indices to expand coverage and reduce the cost of protection. This article states six principles for designing catastrophic risk transfer systems and discusses practical issues for implementation, and then concludes with suggestions for future research.
PATRICE PONCET and VICTOR E. VAUGIRARD
In this article, the authors develop an arbitrage approach to valuing insurance‐linked securities (ILS) for non‐catastrophic events within a framework of stochastic interest…
Abstract
In this article, the authors develop an arbitrage approach to valuing insurance‐linked securities (ILS) for non‐catastrophic events within a framework of stochastic interest rates. The prices of these transactions are driven by both an interest rate process and a non‐trivial actuarial risk process. The authors find that the duration of ILS is, in most cases, higher than the Macaulay duration of risk‐free bonds, which implies that the alleged relative out‐performance of ILS is illusory.
Households are exposed to a wide array of risks, characterized by a known or unknown probability distribution of events. Disasters are one of these risks at the extreme end…
Abstract
Households are exposed to a wide array of risks, characterized by a known or unknown probability distribution of events. Disasters are one of these risks at the extreme end. Understanding the nature of these risks is critical to recommending appropriate mitigation measures. A household’s resilience in resisting the negative outcomes of these risky events is indicative of its level of vulnerability. Vulnerability has emerged as the most critical concept in disaster studies, with several attempts at defining, measuring, indexing and modeling it. The paper presents the concept and meanings of risk and vulnerability as they have evolved in different disciplines. Building on these basic concepts, the paper suggests that assets are the key to reducing risk and vulnerability. Households resist and cope with adverse consequences of disasters and other risks through the assets that they can mobilize in face of shocks. Asustainable strategy for disaster reduction must therefore focus on asset‐building. There could be different types of assets, and their selection and application for disaster risk management is necessarily a contextual exercise. The mix of asset‐building strategies could vary from one community to another, depending upon households’ asset profile. The paper addresses the dynamics of assets‐risk interaction, thus focusing on the role of assets in risk management.
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Mellina da Silva Terres and Cristiane Pizzutti dos Santos
The purpose of this paper is to address the impact of affect (as opposed to cognition) on patient trust in high‐consequence exchanges. The authors also investigate the mediator's…
Abstract
Purpose
The purpose of this paper is to address the impact of affect (as opposed to cognition) on patient trust in high‐consequence exchanges. The authors also investigate the mediator's role of trust in the relationship between affect and cognition, and behavioural intentions.
Design/methodology/approach
Using undergraduate students from a large North American university, three between‐subjects experiments were performed.
Findings
Study 1 findings demonstrate that affect and cognition elements equally influence trust in high‐consequence decisions. Also, trust is an important mediator between affect and cognition and the intention to continue the relationship and to seek a second opinion. Study 2 reinforces the importance of trust for the patient's evaluations, showing that when trust is low, the second opinion influences patient satisfaction. However, when patient trust is high, the second opinion (the same or different, compared with the first diagnosis) does not affect patient satisfaction. Study 3 shows that, in low‐consequence choices, cognition is a more relevant antecedent of trust than affect. Affect is important when cognition aspects (e.g. the competence of the doctor) are perceived as low.
Originality/value
As an original contribution, this study addresses the different impacts of affect and cognition aspects on patient trust, in high‐ and low‐consequence exchanges. Also, it highlights the importance of patient trust in the doctor when a second opinion is sought: a different diagnosis depletes patient satisfaction only for patients with low levels of trust in the doctor.
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Dejun Tony Kong, William P. Bottom and Lee J. Konczak
The purpose of this paper is to examine how negotiators’ self-evaluated emotion perception is related to value claiming under two incentive schemes. Adopting an ability-motivation…
Abstract
Purpose
The purpose of this paper is to examine how negotiators’ self-evaluated emotion perception is related to value claiming under two incentive schemes. Adopting an ability-motivation interaction perspective, the authors hypothesize that the relationship will be stronger in the contingent (upon value-claiming performance) versus fixed (non-contingent upon value-claiming performance) pay condition.
Design/methodology/approach
Multi-level analysis of data (120 participants, 60 dyads) from a laboratory study provided evidence supporting the hypothesis proposed in this paper.
Findings
Emotional perception was indeed more strongly related to value claiming in the contingent pay condition than in the fixed pay condition. Negotiators’ emotion perception also had a direct, positive linkage with relationship satisfaction, regardless of the incentive scheme.
Research limitations/implications
The limitations of the current paper include self-report measures of emotion perception, a US student sample and a focus on value claiming as the instrumental outcome. The authors urge future research to address these limitations in replicating and extending the current findings.
Originality/value
The present paper is the first to explicitly test the moderating role of incentive schemes on the linkage between negotiators’ emotion perception and performance. The findings not only show the context-dependent predictive value of negotiators’ emotion perception but also shed light on both negotiation and emotional intelligence (EI) research.
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Albert Agbeko Ahiadu and Rotimi Boluwatife Abidoye
This study systematically reviewed existing literature on the impact of economic uncertainty on property performance to highlight focus areas and spur future research amid…
Abstract
Purpose
This study systematically reviewed existing literature on the impact of economic uncertainty on property performance to highlight focus areas and spur future research amid unprecedented global uncertainty levels. Conceptually, uncertainty levels and environmental dynamism are related to investors' risk judgement and decision-making.
Design/methodology/approach
Peer-reviewed journal articles published from 2007 to 2022 were assembled and arranged through the Scientific Procedures and Rationales for Systematic Literature Reviews (SPAR-4-SLR) protocol. The initial search produced 2,028 results from the Web of Science and Scopus databases, which were rigorously purified for a final dataset of 70 articles. These records were subsequently assessed through content analysis, bibliographic modelling, topic modelling and thematic analysis. Recurring themes were visualised using the VOSviewer software.
Findings
The existing literature suggests that economic uncertainty negatively impacts investment volumes, returns and performance. Research has also increased since 2018, with a strong emphasis on the housing sector and developed property markets. Commercial property and emerging markets account for only 10 and 8% of previous research, respectively.
Practical implications
These findings highlight the negative impact of economic uncertainties on property performance and investment volumes, which necessitate careful risk assessment. Given the high susceptibility of emerging and commercial property markets to uncertainty, these markets warrant further research amid ongoing uncertainty concerns across the globe.
Originality/value
Given current unprecedented levels of global uncertainty, the effects of economic uncertainty have received renewed interest. This study synthesised the current understanding of how different property markets respond to increased uncertainty and outlined future research directions to enhance understanding. Themes and relationships were also integrated into a conceptual map summarising the reported effects of economic uncertainty on housing, commercial property, investment and behaviour in the property market.
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Tanuj Mathur and Ujjwal Kanti Paul
Home insurance is widely recognised as a tool for mitigating economic risk associated with natural disasters. This study aims to analyse the influence of homeowners’ home…
Abstract
Purpose
Home insurance is widely recognised as a tool for mitigating economic risk associated with natural disasters. This study aims to analyse the influence of homeowners’ home insurance knowledge (both objective and subjective types), perceived benefits (PB) and perceived vulnerability towards disaster loss (PVUL) on their intention to purchase (ITP).
Design/methodology/approach
This research makes use of survey data collected from 394 respondents (the homeowners) residing in various parts of India. The structural equation modelling is used to verify 11 hypotheses proposed in the study.
Findings
The findings indicate that both objective knowledge (OK) and subjective knowledge (SK) of home insurance have significant influence on homeowners’ benefit perception and PVUL. The homeowners’ PB of home insurance negatively affect PVUL. The OK of home insurance has a stronger influence on homeowners’ ITP home insurance than SK while the homeowners benefit perceptions and PVUL significantly affects homeowners’ ITP home insurance. These findings confirms that if homeowners are knowledgeable about home insurance, they perceive the plans as more beneficial and feel less vulnerable about catastrophic events, resulting in positive intentions towards purchasing them.
Originality/value
To the best of the authors’ knowledge, this is the first comprehensive research that assesses the Indian homeowners’ knowledge, PB and PVUL in influencing their ITP home insurance. The finding of this paper will assist both public and private insurance companies in India and similar markets in designing and implementing effective strategies to sell home insurance policies.
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P.F.G. Banfill, D.P. Jenkins, S. Patidar, M. Gul, G.F. Menzies and G.J. Gibson
The work set out to design and develop an overheating risk tool using the UKCP09 climate projections that is compatible with building performance simulation software. The aim of…
Abstract
Purpose
The work set out to design and develop an overheating risk tool using the UKCP09 climate projections that is compatible with building performance simulation software. The aim of the tool is to exploit the Weather Generator and give a reasonably accurate assessment of a building's performance in future climates, without adding significant time, cost or complexity to the design team's work.
Methodology/approach
Because simulating every possible future climate is impracticable, the approach adopted was to use principal component analysis to give a statistically rigorous simplification of the climate projections. The perceptions and requirements of potential users were assessed through surveys, interviews and focus groups.
Findings
It is possible to convert a single dynamic simulation output into many hundreds of simulation results at hourly resolution for equally probable climates, giving a population of outcomes for the performance of a specific building in a future climate, thus helping the user choose adaptations that might reduce the risk of overheating. The tool outputs can be delivered as a probabilistic overheating curve and feed into a risk management matrix. Professionals recognized the need to quantify overheating risk, particularly for non‐domestic buildings, and were concerned about the ease of incorporating the UKCP09 projections into this process. The new tool has the potential to meet these concerns.
Originality/value
The paper is the first attempt to link UKCP09 climate projections and building performance simulation software in this way and the work offers the potential for design practitioners to use the tool to quickly assess the risk of overheating in their designs and adapt them accordingly.
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