Abstract
Recently, the climate regulations and stop-loss regulations have become a central policy parameter globally. In market-oriented economies, insurers as the biggest stakeholder-industry of natural disaster risk are facing the issue related to industry sustainability. Thus, the policy implications of natural disasters regulation on the insurance industry are enormous. Therefore, this chapter has made an effort to analyze the disaster management in the integrated framework. This integrated framework is based upon the analysis of the role of regulatory actions taken by three actors, namely, disaster regulation, insurance regulations, and firms' actions across the three stages of disaster management, namely, pre-disaster, underwriting, and post-disaster stages in G-7 economies. Based on the outcomes of the current analysis, the chapter found that there are two polar opposite integrated models (i.e., isolated best policy model in the case of Japan and spiral policy model in the case of Italy). Five models fall in between the two.
TopLiterature Review
The context covered in the present chapter is one of the most popular topics in the insurance literature. Therefore numerous studies are available on almost every small aspects of this topic. For example (Andjelkovic, 2001) focused on socio-economic surveys to map the vulnerability of communities against any disaster. Whereas some studies have focused on occupational dependence and vulnerability of people living in high-risk zones (Wang et al., 2013).Out of which some may have an adverse impact on underwriting, risk modeling, and risk transfer techniques (Wang et al., 2013).For example, one common dilemma between policymakers and insurers is post-disaster funding formats. The inappropriate formats may adversely impact the development of natural disaster insurance markets. Whereas small incentives for lower probability risks at the pre-disaster stage, can help in the development of the market. Despite similar other conflicting outcomes, little effort have been made to understand the issue in the integrated framework. The overall literature in the domain on this subject can broadly be classified in three separate stages of disaster management namely, pre-disaster stage, underwriting stage, and post-disaster stage (Outreville, 1992; Andjelkovic, 2001;UNESCO, 2001, UNCTAD, 2007, UNESCO, 2012; Silva, 2009; Dolce, 2012; Schalfer, 2018; Mahito, 2007; Mills, 2009; Kwon, 2010).
Key Terms in this Chapter
Disaster Stage: The state when national regulators and policymakers formulate policy stimulus for the development of the insurance industry. This stage can also be juxtaposed to the underwriting stage of the insurance industry.
National Regulation: In the present context, we are projecting those national level regulations which are either brought to stop the losses of natural disaster or brought to restore the situation after natural disasters.
G-7 Countries: The world's seven most powerful industrialized countries - the US, Japan, Germany, the UK, France, Italy, and Canada.
Pre-Disaster Stage: The preventive state for stopping the losses occurred due to natural disasters. This stage also incorporates regulation regarding stopping the climate change problem.
Sectoral Regulation: By sectoral regulation, we mean the insurance regulations of any kind.
Post-Disaster Stage: The state when disaster has already occurred, and the government is involved in rescue activities. This stage also involves the period between the occurrence of a disaster to rehabilitation and reconstruction for normalizing the lives of people. At this stage, the insurance industry processes the claims for insured disaster victims.