Participation and Disintermediation in a Risk Society
Robert J. Rhee
University of Maryland - Francis King Carey School of Law; University of Florida Levin College of Law
Law and Recovery After Disaster: Hurricane Katrina, Chapter 7, at 103-126 (Robin Paul Malloy, ed., Ashgate Press, 2008)
U of Maryland Legal Studies Research Paper No. 2007-21
This is a book chapter in a forthcoming book, Law, Property, and Society (Ashgate Press). The chapter argues that financing extreme catastrophic loss will become more problematic as catastrophes become more frequent and severe. An effective strategy must increase the level of participation in the spreading of risk and loss. Currently, risk spreading is done largely through insurers and government as they are the default aggregators of private and public capital. An enlargement of participation may mean the disintermediation of the traditional insurance and public compensation functions, thus allowing more direct and efficient participation between those are exposed to risk and those who are willing to bear it. This chapter also argues that tax policy should consider catastrophe risk and compensation as a way to positively influence risk-taking behavior. Currently, tax policy focuses on the equity and fairness of taxation of individual income, but these considerations are also at the heart of public financing of catastrophes.
Number of Pages in PDF File: 21
Keywords: Diaster, Disaster Relief, Financing Catastrophe, Catastrophe, Catastrophic Risk, Katrina, September 11, 9/11, public finance, flood insurance, catastrophe compensation, compensation fund, national flood insurance, securitization, insurance securitization, alternative risk transfer
JEL Classification: D3, D6, D7, H1, H2, H5, K1, K00Accepted Paper Series
Date posted: April 24, 2007 ; Last revised: May 21, 2009
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