ISSN:
1573-0476
Keywords:
Catastrophic risk
;
contra proferentem
;
coverage formulas (exposure, manifestation, triple-trigger)
;
pollution exemption
;
socialized losses
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract Socializing risks from catastrophic losses is difficult even in an ideal political environment, owing to different estimates of low probability risks, solvency constraints, dangers of moral hazard, and high loss correlation. However, these intrinsic contracting problems do not justify invalidating ordinary insurance contracts or forcing insurers to cover catastrophic losses. Yet, political pressures forcing insurance subsidies now induce inefficient decisions in siting and construction, with high expected social losses. Ordinary contract solutions are always imperfect, but superior to the regulatory maze. Unfortunately, patterns of legislation and court decisions are running in the wrong direction.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/BF00055799
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