The role of risk classification as a remedy for asymmetric information market failure is widely recognized and adverse selection is commonly expected to cause market failure also in natural disaster insurance market. Actually, natural catastrophe insurance is a hot topic for the fact that national governments need to build a system to face the high cost of disaster assistance and damage compensation. But an efficient natural disaster insurance is based also on a coherent risk classification and this is the key point of the paper. We argue that issues of risk classification should be a major concern in the design of natural disaster insurance, especially in countries, such as Italy, with a so low penetration of this kind of insurance. The paper is structured as follows. Section 2 provides information on the Italian NatCat insurance. Section 3 describes risk classification looking at the demand side of the market. Section 4 analyses adverse selection in NatCat insurance market and the role of risk classification. Section 5 concludes.

Risk Classification in Natural Catastrophe Insurance: The Case of Italy

PORRINI, Donatella
2016-01-01

Abstract

The role of risk classification as a remedy for asymmetric information market failure is widely recognized and adverse selection is commonly expected to cause market failure also in natural disaster insurance market. Actually, natural catastrophe insurance is a hot topic for the fact that national governments need to build a system to face the high cost of disaster assistance and damage compensation. But an efficient natural disaster insurance is based also on a coherent risk classification and this is the key point of the paper. We argue that issues of risk classification should be a major concern in the design of natural disaster insurance, especially in countries, such as Italy, with a so low penetration of this kind of insurance. The paper is structured as follows. Section 2 provides information on the Italian NatCat insurance. Section 3 describes risk classification looking at the demand side of the market. Section 4 analyses adverse selection in NatCat insurance market and the role of risk classification. Section 5 concludes.
File in questo prodotto:
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11587/395501
 Attenzione

Attenzione! I dati visualizzati non sono stati sottoposti a validazione da parte dell'ateneo

Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus ND
  • ???jsp.display-item.citation.isi??? ND
social impact