Solutions to Catastrophe Insurance Market Failures
Insurance for catastrophes—floods, wildfires, windstorms, and more—is failing. As a result, the topic of insurance is once again top of mind as residents, first responders, and lawmakers assess billions of dollars in damage and chart a path forward.
Jay Feinman, co-director of the Center for Risk and Responsibility at Rutgers Law School, is contributing to this ongoing discussion with a newly published paper, “Designing Public Solutions to Catastrophe Insurance Market Failures.”
The focus of the paper is on property insurance, particularly homeowners insurance, in developing issues in the design of public solutions. It asks all the right questions. In designing public solutions to catastrophe insurance failures, what precisely is the problem to be solved? Which risks should be included? How should prices be set? To what extent should policyholders be indemnified? And so on. The value of the project is that without asking the right questions, arriving at the right answer is purely a matter of chance.