This comprehensive study responds to the growing concerns of economic, financial, political and social actors regarding the ever increasing exposure to new expanding risks. These risks are particularly related to natural disaster/environment pollution, technology, health and terrorism. For insurers the difficulty is encountered in adequately appraising and covering the potential liability stemming from these risks. It also sketches out some policy recommendations for decision makers in governments and in the business community on how to limit, prevent and manage such risks. In this perspective it will constitute a unique reference work for the attention of both OECD countries and emerging economies.
- 28 July 2003
Remedies for Dealing with Expanding Liability for Systemic Risks
In the previous section, we discussed a variety of instruments that are available for insurers for dealing with increasing systemic risks. An upper limit on coverage may be an appropriate remedy for uncertainty concerning the magnitude of the damage; charging an appropriate risk premium can be used to deal with insurer ambiguity. Lastly, risk differentiation is the general means of coping with expanding systemic risks...