CATASTROPHES AND CATASTROPHE INSURANCES

Abstract

1.1 This paper focuses on sections of the insurance industry which are not often widely discussed. If catastrophe insurances are to be transacted successfully, a large number of different technical skills and experiences must be combined. Actuaries in the U.K. are still relatively little employed on the problems of general insurance, and are rarely involved in the complexities of these particular sections of it. It must be recognized that there is only limited scope for the application of actuarial skills in this field. However, there may be some advantage to be gained by mixing an intelligent statistical opinion with other specialized technical or practical ones when some catastrophe problems are being discussed. Before expressing a view on any topic, it is, of course, essential to learn about the background and existing conditions. 1.2 The concept of catastrophe is considered in section 2 of this paper. Potential catastrophe situations can be classified into two groups, natural hazards and man-made hazards. Each of the sections 3-9 deals with one of the principal natural hazards, giving an outline of the causes of catastrophic events, the type of losses to be expected, and the form of insurance cover likely to be available in vulnerable areas. Section 10 describes the New Zealand state scheme, which provides cover in the event of extraordinary losses from nearly all elemental perils, and war. Sections 11-16 each deal with a different type of situation where a man-made catastrophe can occur, and the insurance provisions available in each case. Having thus set the background, the later sections of the paper consider some of the aspects involved in transacting catastrophe insurances. As indicated above, the nature of this type of business is such that there is no