S01-01 Micro-Credit and Micro-Insurance for Earthquake Disaster Mitigation

Description:
Catastrophe risk transfer through insurance and reinsurance has been widely used in developed parts of the world for the past two decades in an orderly fashion. The scientific and technological basis for the quantification of risk over this time has made the available insurance/reinsurance products quite robust as well as universally adapted. Unfortunately, these products are mainly used in developed parts of the world due to the level of catastrophe risk and the premium structure. Thus, the modern knowledge of quantification and understanding of catastrophe risk has not been of great benefit to many in developing parts of the world.

It is well known that after each catastrophic event, it is the poor who are impacted the most. Due to extremely low level of risk (in monetary terms) of these poorer sections of any society, the insurance/reinsurance industry has not paid much attention to helping them. Thus, a typical rural farmer who may lose his “hut” and his means of generating income after a disaster is completely devastated since he and millions like him are not covered by any insurance. Catastrophe Micro-insurance as a concept and as a potential product is targeted for such people. It is estimated that almost a billion individuals who are at risk due to natural or man-made catastrophe events do not have any risk transfer mechanism. Because of the size of these potential aggregate losses from such poorer sections of the society, the governments (of developing countries) do not have the resources to help these people.

Micro-insurance may be the means by which such market can be developed and helped. Even though the individual value at risk from rural areas of Asia, Africa and Central/South America is low, the aggregate market is immense. This has been noted by major insurance and reinsurance players around the world. The World Bank, the Asian Development Bank, individual countries, and most insurance/reinsurance companies are very much interested in micro-insurance as a concept. Micro-insurance, which is a subset of micro-finance, has been concentrated on non-catastrophic areas; hence the need to increase concentration on the catastrophic areas.

This special session will address this emerging option of risk management by those who cannot purchase conventional insurance products for catastrophe risk. Papers are invited from those who are working on this problem. There are many pilot projects around the world using catastrophe micro-insurance concepts. This session will be especially of interest to those who are working on problems in micro-insurance from concept to product to implementation.

Convener:
Haresh Shah
Professor
Address: 7015 Gateway Blvd, Newark, CA 94560, USA
Tel: 001-510-608-3356
E-mail: hshah@stanford.edu haresh.shah@rms.com

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Early Registration:
May 31, 2008

Paper Submission:
August 15, 2008 (Beijing Time)