Federal Reinsurance for Disasters |
September 2002 |
This Congressional Budget Office (CBO) study, which
was prepared at the request of the Senate Budget Committee, analyzes proposals
for federal reinsurance of risks from terrorism and natural disasters.
David Torregrosa of CBO's Microeconomic and Financial Studies Division
wrote the paper, with contributions from Perry Beider, Kim Kowalewski,
and Marvin Phaup, under the direction of Roger Hitchner. Tim VandenBerg,
formerly of CBO, began the project.
Many other people contributed to the report. Rade T. Musulin of the
Florida Farm Bureau Insurance Companies; Richard Roth Jr., a consulting
actuary; Howard Kunreuther of the University of Pennsylvania's Wharton
School; and Ron Feldman of the Minneapolis Federal Reserve reviewed several
drafts. David Rafferty, formerly of the New Zealand Treasury, provided
valuable information on New Zealand's disaster insurance program. Barry
Anderson, Megan Carroll, Deborah Clay-Mendez, William Gainer, Mark Hadley,
Arlene Holen, Deborah Lucas, Angelo Mascaro, Robert Murphy, Allison Percy,
and Tom Woodward, all of CBO, made useful suggestions.
Amelie Cagle, Mark Puccia, Donald Watson, and David Weiss, all of Standard
& Poor's, provided background information on the insurance industry
and the implications of September 11. Anthony Mormino, Frank Nutter, and
Mary Zetwick of the Reinsurance Association of America provided information
on the reinsurance industry. Jim Boyd of Resources for the Future provided
guidance on the effects of limiting damage awards.
The following people also contributed various forms of assistance or
data: Dennis Kuzak of EQECAT; Barbara Jacobik, Tim Mantz, and Rick Shiver
of the Federal Emergency Management Agency; Herbert Mitchell and Joyce
Northwood of the Small Business Administration; Dan Kutzer of the Florida
Windstorm Underwriting Association; J.D. Lester of the Florida Residential
Property and Casualty Joint Underwriting Association; Jack Nicholson of
the Florida Hurricane Catastrophe Fund; Stan Devereux of the California
Earthquake Authority; Richard Kerr and Michelle Kinlaw of MarketScout;
Barry Meiners of the Council of Insurance Agents and Brokers; and John
Rollins of the Florida Farm Bureau Insurance Companies.
Christine Bogusz edited the report, and Leah Mazade proofread it. Rae
Wiseman produced drafts of the manuscript, and Kathryn Winstead prepared
the study for publication. Annette Kalicki produced the electronic versions
for CBO's Web site.
Dan L. Crippen
Director
September 2002
Tables |
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1. |
Operating Results for U.S. Property and Casualty Insurers, 1990 Through
2001 |
2. |
Selected State-Sponsored Insurance Suppliers |
3. |
Insured Losses from Hurricane Andrew |
4. |
Annual Premiums for a $150,000 Frame Home in California, 1993 Through
2000 |
5. |
Federal Financial Assistance After Selected Disasters |
A-1. |
Arbitration Decisions in Florida |
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Figure |
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1. |
Catastrophe Reinsurance Price Index, 1984 to 2001 |
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Box |
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B-1. |
USAA's Catastrophe Bonds |
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