Papers in French and English based on four weeks of addresses, debates, and collective understanding of the law as it relates to international catastrophes at the Hague under the aegis of the Hague Academy of International Law in 1995.
"Economic theory suggests that countries should ignore uncertainty for public investment and behave as if indifferent to risk because they can pool risks to a much greater extent than private investors can. This paper discusses the general economic theory in the case of developing countries. The analysis identifies several cases where the government's risk-neutral assumption does not hold, thus making rational the use of ex ante risk financing instruments, including sovereign insurance. The paper discusses the optimal level of sovereign insurance. It argues that, because sovereign insurance is usually more expensive than post-disaster financing, it should mainly cover immediate needs, while long-term expenditures should be financed through post-disaster financing (including ex post borrowing and tax increases). In other words, sovereign insurance should not aim at financing the long-term resource gap, but only the short-term liquidity need."—Abstract.
"Natural hazards adversely affect hundreds of thousands of people worldwide each
year and cause extensive property damage. In 2007, a year that was not considered
an exceptional one for natural hazards, natural hazards caused an estimated 14,600
deaths and $70 billion in property losses. For that year, the insurance industry
covered $23.3 billion in losses. In catastrophic loss years, such as 2005—the year that saw Hurricane Katrina—losses can be far greater. Scientific assessments indicate
that climate change is expected to alter the frequency and severity of natural hazard
events, and as a result, losses can be expected to climb. Given this scenario,
examining policies that are used in other countries to reduce the loss of life and
property caused by natural hazard events and examining insurance approaches that
provide coverage for natural hazard losses can help identify practices in both areas
that could benefit the United States. Similarly, given the ongoing challenges facing
the United States, international cooperative efforts may provide instructive examples
of risk management and disaster reduction."—Introductory Letter to Congressional Committee on Financial Services
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