Catastrophic Risk Securitization and Government Action

摘要

The traditional insurance mechanism alone cannot spread the risk of repeated catastrophic losses."Risk securitization",insurance securitization or securitization of risk for loss from future events,generally provides an selection to traditional reinsurance and can transfer risk to the deep pool of the global capital markets.Presently,this process has just taken a few steps in some developed countries.But due to market's inherent disadvantages such as adverse selection ,inadequate spread of risk and difficulty in accurate loss assessment,risk securitization proceeds unsmoothly.Government has to play action in adressing imperfections of private insurance market.However,government is not all-powerful for inefficience,incompetence and corruption.The better way suggested in this paper is that government foster a regulatory environment in which the private sector can develop a capital market solution for catastrophe.Thus,the best solution to catastrophe management is to combine the market self-function mechanism with government's adjustments.