Facing Mother Nature

7 Pages Posted: 2 Nov 2007

See all articles by Martin F. Grace

Martin F. Grace

Temple University - Risk Management & Insurance & Actuarial Science

Robert W. Klein

Georgia State University


Homeowners insurance must be priced in accordance with the insured risk and associated costs. Any legitimate insurance arrangement, public or private, must manage its exposure so that it can satisfy its claims obligations if a disaster occurs. Following the devastating hurricane season that featured Katrina, the catastrophe insurance industry has been adapting its practices in order to better follow these precepts, but the industry has met opposition from state and federal legislators. There are private market solutions to the problem of managing and insuring catastrophe risk. Private catastrophe financing would work better if the government did not constrain and compete against it.

Keywords: mother nature, martin grace, robert klein, insurance markets, catastrophe perils, catastrophe risk, insurance industry, policy, economics, hurricanes, natureal disasters, role of insurance, insured losses, profit, legislation, homeowners insurance, federal financing, private market, risk taking

JEL Classification: E62, H53, H59, H81, I38, G22

Suggested Citation

Grace, Martin F. and Klein, Robert Warren, Facing Mother Nature. Regulation, Vol. 30, No. 3, Fall 2007. Available at SSRN: https://ssrn.com/abstract=1025979

Martin F. Grace (Contact Author)

Temple University - Risk Management & Insurance & Actuarial Science ( email )

Fox School of Business and Management
1301 Cecil B. Moore Ave.
Philadelphia, PA 19122
United States

Robert Warren Klein

Georgia State University ( email )

5387 Northchester Ct
Atlanta, GA GA 30338
United States
404-386-1591 (Phone)

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