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'Catastrophe Risk Financing in Developing Countries' provides a detailed analysis of the imperfections and inefficiencies that impede the emergence of competitive catastrophe risk markets in developing countries. The book demonstrates how donors and international financial institutions can assist governments in middle- and low-income countries in promoting effective and affordable catastrophe risk financing solutions. The authors present guiding principles on how and when governments, with assistance from donors and international financial institutions, should intervene in catastrophe insurance markets. They also identify key activities to be undertaken by donors and institutions that would allow middle- and low-income countries to develop competitive and cost-effective catastrophe risk financing strategies at both the macro (government) and micro (household) levels. These principles and activities are expected to inform good practices and ensure desirable results in catastrophe insurance projects. 'Catastrophe Risk Financing in Developing Countries' offers valuable advice and guidelines to policy makers and insurance practitioners involved in the development of catastrophe insurance programs in developing countries.

This study examines the effect of the state of the international reinsurance market on the demand for reinsurance by U.S. insurers using data from the years 1993 through 2000. Both the overall demand for reinsurance and the utilization of foreign reinsurance by U.S. insurers are explored. In addition to supporting the findings of prior literature related to the traditional motives for the corporate demand for insurance, evidence indicates that the state of the U.S. reinsurance industry impacts the amount of reinsurance demanded by U.S. insurers. The study also investigates reasons why U.S. insurers utilize a reinsurance program composed of both U.S. and foreign reinsurers. The results indicate that the decision to utilize some percentage of foreign reinsurance is driven primarily by the financial and operational characteristics of the ceding company such as firm size, group affiliation, and organizational form. However, no support is found for the hypothesis that possible differences between the foreign and U.S. reinsurance markets impact the decision to utilize foreign reinsurance.

Some DEA models have been proposed for acceptance or rejection based on a set of cases that have been previously classified. Also, a modified DEA-type linear programming model has been proposed to determine whether a new case must be accepted or rejected, depending on its location on, above, or below the sample frontier. However, these models assume that all attributes that characterize a case are discretionary. This paper extends these results by proposing a model that includes discretionary and non-discretionary attributes (inputs), and more important, a goal program which resembles a modified additive model to determine which characteristics must be changed (and by how much) in order to accept an initially rejected case. A real application is provided to illustrate the potential of the proposed ideas.

Do reinsurers insure the liability faced by the reinsured under its original insurance contract? Where the reinsurance and direct insurance policies are written in identical terms, is it enough for the reinsured to prove its liability under the original insurance policy in order to make a successful claim against its reinsurers? These questions are crucial, because they determine whether the terms of the reinsurance are to be construed identically to those of the direct policy even though they have different governing laws. The issues came before the House of Lords in Wasa International Insurance Co Ltd v Lexington Insurance Co [2009] UKHL 40 and the answers were provided in a judgment delivered on 30 July 2009, the last day of the operation of the House of Lords as a court. This note discusses the nature of facultative reinsurance contracts in the light of their Lordships' ruling.

Extreme weather events produce some of the most deadly and costly natural disasters and are a major concern of the catastrophe reinsurance industry. For example, in 1992 Hurricane Andrew caused over $20 billion (in 2002 U.S. dollars) in insured losses, the largest loss on record due to a natural disaster. In addition, 26 of the top 30 insured losses were produced by extreme weather events, mainly landfalling hurricanes and typhoons and European wind-storms. A better understanding of how extreme events vary with climate would benefit the reinsurance industry and society. The Risk Prediction Initiative hosted a workshop on Weather Extremes and Atmospheric Oscillations that examined how extreme meteorological events of interest to the reinsurance industry are influenced by the quasi-biennial oscillation (QBO), the Arctic Oscillation (AO), and the Madden–Julian oscillation (MJO). Workshop participants concluded that the stratosphere is much more relevant to predictions that aid the reinsurance industry than is generally recognized and that there is mutual interest in fostering research on the relationship between the stratospheric circulation and extreme weather events. A preliminary science–business research agenda, based on presentations and discussions during and after the workshop, highlights four areas of mutual interest to scientists and insurers. The research areas focus mainly on understanding how the QBO, AO, and MJO influence the frequency and intensity of extreme events, with particular emphasis on tropical cyclones and European windstorms. An awareness of how the catastrophe reinsurance industry operates provides insights into why specific research areas were chosen. For example, the reinsurance industry operates on the basis of annual contracts, most of which are renewed on 1 January. Thus, although skillful forecasts at any lead are of interest, skillful forecasts of extreme events are of greatest value when made in the final quarter of a calendar year.

Due to the growth in the international nature of the reinsurance market, there has been increasing pressure in the United States (U.S.) for a system that would permit alien reinsurers, those assuming business from U.S. domiciled ceding companies, a reduced level of collateral, provided certain conditions were met. Support for this change has come from Lloyds, the London market and other non-U.S.-based reinsurers, and a small number of U.S.-based ceding companies. There has been strong opposition to this from U.S. reinsurers, most U. S. primary companies and others. This paper will give an overview of the U.S. reinsurance collateral requirement and discuss issues with perspectives from both sides. It is not the intent of this paper to advocate any position on the issue.