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Papers by Thomas Holzheu
Brookings-Wharton Papers on Financial Services, 2000
The Geneva Papers on Risk and Insurance - Issues and Practice, 2017
The global property protection gap in natural catastrophe risk has widened steadily over the past... more The global property protection gap in natural catastrophe risk has widened steadily over the past 40 years. In historical terms, we find that most underinsurance of extreme events is for climate-related events such as flood and windstorm, but in expected terms, earthquakes comprise the largest share of underinsurance. Using a framework to define the protection gap in historical and expected terms, this paper breaks down the gap by geography and risk type and presents an empirical analysis of the key drivers of the gap. First, uninsured expected cat losses are estimated using models that combine geo-physical vulnerability maps, economic exposure data, and insurance market information. Second, each country's expected (or optimal) property insurance penetration is modeled and compared to actual penetration to derive a measure of property underinsurance. Third, we explore the factors that affect property insurance demand, applying regression analysis to an unbalanced panel data set that includes 53 countries observed over a 15-year period. Several significant economic, financial market, socio-demographic, cultural and institutional variables are identified. The results lead to a taxonomy of the root causes of underinsurance and a set of proposed measures to narrow the protection gap.
Huebner International Series on Risk, Insurance and Economic Security
Insurers buy reinsurance for risks they cannot or do not wish to retain and to benefit from the c... more Insurers buy reinsurance for risks they cannot or do not wish to retain and to benefit from the capital relief reinsurance provides. Reinsurance and primary insurance represent two separate elements in the insurance value chain. By providing coverage against adverse fluctuations in claims, reinsurance protects the capital base of the primary insurer and creates a more diversified portfolio, thus reducing
The Journal of Risk Finance, 2003
Brookings-Wharton Papers on Financial Services, 2000
The Geneva Papers on Risk and Insurance - Issues and Practice, 2017
The global property protection gap in natural catastrophe risk has widened steadily over the past... more The global property protection gap in natural catastrophe risk has widened steadily over the past 40 years. In historical terms, we find that most underinsurance of extreme events is for climate-related events such as flood and windstorm, but in expected terms, earthquakes comprise the largest share of underinsurance. Using a framework to define the protection gap in historical and expected terms, this paper breaks down the gap by geography and risk type and presents an empirical analysis of the key drivers of the gap. First, uninsured expected cat losses are estimated using models that combine geo-physical vulnerability maps, economic exposure data, and insurance market information. Second, each country's expected (or optimal) property insurance penetration is modeled and compared to actual penetration to derive a measure of property underinsurance. Third, we explore the factors that affect property insurance demand, applying regression analysis to an unbalanced panel data set that includes 53 countries observed over a 15-year period. Several significant economic, financial market, socio-demographic, cultural and institutional variables are identified. The results lead to a taxonomy of the root causes of underinsurance and a set of proposed measures to narrow the protection gap.
Huebner International Series on Risk, Insurance and Economic Security
Insurers buy reinsurance for risks they cannot or do not wish to retain and to benefit from the c... more Insurers buy reinsurance for risks they cannot or do not wish to retain and to benefit from the capital relief reinsurance provides. Reinsurance and primary insurance represent two separate elements in the insurance value chain. By providing coverage against adverse fluctuations in claims, reinsurance protects the capital base of the primary insurer and creates a more diversified portfolio, thus reducing
The Journal of Risk Finance, 2003