Abstract
I view weather risk as a subset of the insurance risk securitization that has been ongoing for the last six or seven years. Insurance risk securitization should also continue, especially with the Glass-Steagall repeal potentially encouraging insurance company buyouts. The resulting consolidation of large aggregate risk positions, such as Florida wind and California quake, may need to be “topped-off” and transferred to financial intermediaries other than insurers and reinsurers in the form of swaps and private placement securities. However, I believe this trend will continue and grow and I am happy to offer my observations on this exciting area.
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Reference
Telser, Lester G. and Harlow N. Higinbotham. “Organized Futures Markets: Costs and Benefits,” Journal of Political Economy, Vol. 85, No. 5. (Oct., 1977), pp. 969–1000.
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© 2001 Springer Science+Business Media New York
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Cole, J.B. (2001). Designing and Pricing New Instruments for Insurance and Weather Risks. In: Figlewski, S., Levich, R.M. (eds) Risk Management: The State of the Art. The New York University Salomon Center Series on Financial Markets and Institutions, vol 8. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-0791-8_7
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DOI: https://doi.org/10.1007/978-1-4615-0791-8_7
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