Earthquake insurance and disaster assistance
Subtitle: the effect of catastrophe obligation guarantees on federal disaster-assistance expenditures in California
By: Tom LaTourrette ... [et al.].
Contributors: Institute for Civil Justice (U.S.); California Earthquake Authority
Series: Rand technical report -- TR-896-CEA; Technical report (Rand Corporation) -- TR-896-CEA.
Publisher: RAND
Published: 2010
Place of publication: Santa Monica, CA
Language: eng
Number of pages: 27
ISBN-13: 9780833050953
Subjects: Disaster insurance; Disaster relief; Earthquake insurance
Description: In an effort to increase the availability and affordability of insurance for catastrophic events, the Catastrophe Obligation Guarantee Act was introduced in Congress in 2009. One of the arguments in support of this provision is that it lowers insurer costs, which lowers premium rates, increases the number of residents who buy catastrophe insurance, decreases the uninsured loss in disasters, and, ultimately, decreases federal disaster-assistance spending. The California Earthquake Authority, a state-managed catastrophe-insurance program that would qualify for the loan guarantees, sought an estimate of the potential magnitude of this effect for earthquakes in California. As part of the analysis, the report examines the price elasticity for earthquake insurance and relationships between earthquake-insurance coverage and loss compensation. We find that catastrophe obligation guarantees would reduce federal disaster-assistance costs by $3 million to $7 million for every $10 billion in total earthquake loss. Our findings show that changes in insurance coverage would have to be dramatic to have an appreciable impact on uninsured loss and disaster assistance. This result suggests that other avenues for increasing earthquake-insurance coverage, including offering new earthquake-insurance products that provide more-attractive options for consumers, might warrant consideration.
Notes: "Sponsored by the California Earthquake Authority."

"Institute for Civil Justice."

Includes bibliographical references (p. 25-27).

Also available on the internet via WWW in PDF format.