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Key elements of disaster management are prevention, mitigation, preparedness, response and relief, rehabilitation. The various stakeholders in the process of disaster mitigation are policy makers, decision makers, administration, professionals, professional institutions, R&D institutions, financial institutions, insurance sector, community, NGOs and the common man. Insurance has played a very important role. The advanced countries have developed the insurance system and made it effective and mandatory – as a result the loss of lives and property is comparatively less. In India, most of the losses suffered in natural disasters are not insured, for reasons such as lack of purchasing power, lack of interest in insurance, theory of karma attitude and ignorance of availability of such covers. Quite large numbers of agencies provide the insurance cover and foreign insurance companies have already ventured in such areas. This implies that the commercial and private sector can also play an essential role in disaster mitigation. The present study attempts to fill the gap in studies on the role of the insurance sector in disaster management.

This paper aims to study the data on losses on mortgage insurance in the Dutch housing market to find the key drivers of the probability of loss. In 2013, 25 per cent of all Dutch homeowners were “under water”: selling the property will not cover the outstanding mortgage debt. The double-trigger theory predicts that being under water is a necessary but not sufficient condition to predict mortgage default. A loss for the mortgage insurer is the result of a default where the proceedings of sale and the accumulated savings for postponed repayment of the principal associated to the loan are not sufficient to repay the loan.

For this study, the authors use a data set on losses on mortgage insurance at a national aggregate level covering the period from 1976 to 2012. They apply a discrete time hazard model with calendar time- and duration-varying covariates to analyze the relationship between year of issue of the insurance, duration, equity, unfortunate events like unemployment and divorce and affordability measures to identify the main drivers of the probability of loss.

Although the number of losses increases over time, the number of losses relative to the active insurance is still low, despite the fact that the Dutch housing market is the world’s most strongly leveraged housing market. On average, the peak in loss probability lies around a duration of four years. The average loss probability is virtually zero for durations larger than 10 years. Mortgages initiated just prior to the beginning of the financial crisis have an increased loss probability. The most important drivers of the loss probability are home equity, unemployment and divorce. Affordability measures are less important.

Mortgage insurance is available for the lower end of the market only and is intended to decrease the impact of risk selection by banks. The analysis is based on aggregate data; no information on individual households, like initial loan-to-value and price-to-income ratios; current home equity; and unfortunate events, like unemployment and divorce, is available. The research uses averages of these variables per calendar year and/or duration. Information on repayments of insured mortgages is missing.

This paper is the first to describe the main drivers of losses on insured mortgages in The Netherlands by using loss data covering two housing market crises, one in the early 1980s and the current crisis that started in 2008. Much has changed between the two crises. For instance, prices have risen steeply as has household indebtedness. Furthermore, alternative mortgage products have increased in popularity. Focusing a study on the drivers of mortgage losses exclusively on the current crisis could therefore be biased, given the time-specific circumstances on the housing market.

The purpose of this paper is to demonstrate how crop price insurance premium can be calculated using an option pricing model and how insurers can transfer underwriting risks in the futures market.

Based on data from spot and futures market in China, this paper develops an improved B-S model for the calculation of crop price insurance premium and tests the possibility of hedging underwriting risks by insurance firms in the futures market.

The authors find that spot price of crops in China can be estimated with agricultural commodity futures prices, and can be taken as the insured price for crop price insurance. The authors also find that improved B-S model yields better estimation of crop price insurance premium than traditional B-S model when spot price does not follow geometric Brownian motion. Finally, the authors find that hedging can be one good alternative for insurance firms to manage underwriting risks.

This paper develops an improved B-S model that is data-driven in nature. Insured price of the crop price insurance, or the exercise price used in the B-S model, is estimated from a co-integration model built on spot and futures market price series. Meanwhile, distributional patterns of spot price series, one important factor determining the applicability of B-S model, is factored into the improved B-S model so that the latter is more robust and friendly to data with varied distributions. This paper also verifies the possibility of hedging of underwriting risks by insurance firms in the futures market.

The 11th September terrorist attacks on America continue to affect the corporate real estate industry, and this paper is intended to address a number of those ongoing effects. It first discusses property insurance coverage in general and then proceeds to analyse whether damage from acts of terrorism is covered under pre‐11th September and post‐11th September property insurance polices. It also addresses the current status of proposed US Government intervention as a terrorism insurance backstop. It then describes the strategies which certain clients located within the areas directly affected by the terrorist attacks implemented in order to be able to gain immediate access to alternative space. Finally it examines selected lease clauses to which landlords and tenants should pay closer attention in light of the terrorist attacks, including operating expense provisions, force majeure provisions, waiver of subrogation provisions, use prohibitions and alteration provisions.

In general, the insurance industry accepts large risks due to the frequency and severity of extreme events. Because of the short record on hazard data for such events, a large amount of uncertainty has to be dealt with. Given this large uncertainty it is important to better quantify the hazard parameters that are defined as inputs to the catastrophe models. The purpose of this paper is to evaluate the hurricane risk from loss point of view in the USA for both long‐term and warm phase conditions using a simulation‐based stochastic model.

A Poisson process is used to simulate the occurrence of events for both conditions. The generated event‐sets were used along with vulnerability and cost models to estimate the loss to an insurance industry portfolio. The paper discusses the statistics of events categorized by the Saffir‐Simpson Hurricane Wind Scale, annualized and return period losses and compares the results for both assumed long‐term and warm phase climate states.

The analysis shows that the population of landfall data for the two climate conditions is not statistically different. However, if we accept that a difference in the frequency of landfall occurrence between the two assumptions exists, the increase in average annual loss is about 17 per cent.

This paper provides insights to the difference between the two states of atmosphere from the point of view of insured losses for hurricanes and is one of the first papers that offers conclusion on the uncertainty associated with the warm phase data.

The second major area of the so-called risk treatment is risk financing. Risk financing includes measures to finance the costs of losses, risks, and uncertainties. Historically, risk financing has been virtually synonymous with buying insurance. However, over time alternatives to insurance have evolved – self-insurance, pools, captives, large deductible programmes, finite insurance programmes, banking arrangements, and capital market-based solutions. The concept of risk financing has expanded to include products that address a range of financial risks such as interest rate and credit risk. These products include derivatives and some new innovative securities.

Today, the rapid development of the risk financing market has created several practical problems. Notably, regulatory and legal structures have not always kept pace with change, leading to much confusion about risk financing alternatives. Many products look and function almost identically to others, and yet history and custom have dictated very different treatment by regulators, tax authorities, and others. There is growing pressure for significant legal and regulatory realignment.

For newcomers to the field, risk financing measures can be thought of as existing on a continuum, ranging from pure retention (all losses paid directly out of pocket) to pure transfer (where a third party accepts and bears the full costs of risk). An important recognition of the continuum of risk financing is that there are no products that are fully retention or transfer, but rather a varying blend of the two. Hedging of risk, for example, is arguably here a near perfect blending of a retention and a transfer of risk.

The purpose of this paper is to examine how insurance brokers control opportunism at the postcontractual stage of insurance contract in the Nigerian insurance market. Such opportunism, widely reported of insurance commercial customers, threatens the survival of the entire insurance institution while brokers' role is grossly ignored.

The paper involved the use of semi‐structured interviews of insurance broking executives and documentary analyses of how insurance brokers gather and pass on information between clients and insurers to control opportunism in the insurance market.

Findings suggest that the involvement of the insurance brokers from the claim notification stage, claim auditing to actual settlement and dispute mediation are instances of control over customers' opportunistic tendencies. Also, it is found that fear of reputation damage and brokers' professional way of handling clients' over‐exaggeration and suspicious claiming might considerably control insurance opportunism.

Involving insurance brokers in the claim settlement stage is capable of reducing insurers' claim auditing costs while guaranteeing hassle‐free claiming experience for customers and boosting the image of the insurance industry. Hence, findings are relevant for insurance companies and regulators desirous of controlling opportunism in the insurance market.

The paper extends the marketing role of brokers to the claim settlement stage by highlighting their potentials to control clients' opportunistic behaviours which threaten the insurance market.

In Australia broadacre crops can be insured against hail and fire damage and some other perils but not against losses caused by drought, flood or frost. The purpose of this paper is to investigate the private provision of crop insurance in Western Australia.

A farm survey was conducted with the cooperation of dryland farmers belonging to Western Australian grower groups. The willingness to pay for hail insurance is modelled as a function of risk aversion, risk of crop failure and government assistance; and the effect of expected crop yield in t/ha on the crop area is investigated.

The empirical analysis shows that the coefficient of relative risk aversion is 2.7. An increase in the variability of crop yield by 20 per cent, which may be caused by future climate change, would raise the willingness to pay for crop insurance one‐to‐one by 20 per cent. Adverse selection plays a minor role because almost all farmers buy full coverage for hail insurance and associated risks. A future supplier of multi‐peril crop insurance must, however, consider the potential for ex ante moral hazard because the size of the crop area depends on the expected crop yield in t/ha.

The Global Financial Crisis has provided a stark reminder that society crucially depends on the efficient and fair allocation of risk. Climate change threatens the livelihood of farmers and food security. Private multi‐peril crop insurance, which has yet to emerge, would improve the welfare of rural populations and the efficiency of farming.

Few empirical studies deal with the private provision of multi‐peril crop insurance because the market for multi‐peril crop insurance fails worldwide and private insurance does not exist. In this study, Australian crop insurance serves as a proxy to gain an understanding of multi‐peril crop insurance.

Insurance fraud as a global economic problem threatens the financial strength of insurers and threatens the survival of the insurance institution. The purpose of this paper is to explore the magnitude of the problem including the industry's and regulatory authority's responses in tackling the menace in Nigeria. The paper is motivated by the recent effort on the part of the Nigerian regulatory authority to strengthen the sector through consolidation. Such renewed vigour on part of Nigeria is geared towards fighting all forms of economic crimes in both public and private sectors in post‐military years.

The paper reviews the literature on the existing fraud control mechanisms, i.e. insurance contract design and auditing and the perception of fraud by customers in the insurance market. A survey is conducted by interview method to explore the size of the problem and the effectiveness of the approach the industry and its regulator are adopting to control it.

The paper's findings suggest a lukewarm or no serious attitude on the part of the regulatory authority and the insurance companies in appreciating the enormity of the problem now and in the future. This stems from lack of clear‐cut sanctions for offenders and mechanism for enforcement.

The paper reveals the paucity of research of such a topical issue in developing economies and suggests the need for urgent stakeholders' summit that will discuss effects of insurance fraud on the industry with a view to identifying specific roles and responsibilities of each stakeholder group in tackling the problem. This should also be complimented with the establishment of insurance fraud bureau that would promote public awareness campaign on the evil effect of fraud on the economy.

Flood damage to uninsured single-family homes shifts the entire burden of costly repairs onto the homeowner. Homeowners in the United States and in much of Europe can purchase flood insurance. The Netherlands and Asian countries generally do not offer flood insurance protection to homeowners. Uninsured households incur the entire cost of repairing/replacing properties damaged due to flooding. Homeowners’ policies do not cover damage caused by flooding. The paper examines the link between personal bankruptcy and the severity of flooding events, property prices and financial condition levels.

A fully modified ordinary least squares (FMOLS) regression model is developed which uses personal bankruptcy filings as its dependent variable during the years 2000 through 2018. This time-series model considers the association between personal bankruptcy court filings and costly, widespread flooding events. Independent variables were selected that potentially act as mitigating factors reducing bankruptcy filings.

The FMOLS regression results found a significant, positive association between flooding events and the total number of personal bankruptcy filings. Higher flooding costs were associated with higher bankruptcy filings. The Home Price Index is inversely related to the bankruptcy dependent variable. The R-squared results indicate that 0.65% of the movement in the dependent variable personal bankruptcy filings is explained by the severity of a flooding event and other independent variables.

The severity of the flooding event is measured using dollar losses incurred by the National Flood Insurance program. A macro-case study was undertaken, but the research results would have been enhanced by examining local areas and demographic factors that may have made bankruptcy filing following a flooding event more or less likely.

The paper considers the impact of the natural disaster flooding on bankruptcy rates filings. The findings may have implications for multi-family properties as well as single-family housing. Purchasing flood insurance generally mitigates the likelihood of severe financial risk to the property owner.

Natural flood insurance is underwritten by the federal government and/or by private insurers. The financial health of private property insurers that underwrite flooding and their ability to meet losses incurred needs to be carefully scrutinized by the insured.

Prior studies analyzing the linkages existing between housing prices, natural disasters and bankruptcy used descriptive data, mostly percentages, when considering this association. The study herein posits the same questions as these prior studies but used regression analysis to analyze the linkages. The methodology enables additional independent variables to be added to the analysis.