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At War with the WeatherManaging Large-Scale Risks in a New Era of Catastrophes$
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Howard C. Kunreuther and Erwann O. Michel-Kerjan

Print publication date: 2009

Print ISBN-13: 9780262012829

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262012829.001.0001

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A Market Analysis of Property Insurance against Hurricane Risk

A Market Analysis of Property Insurance against Hurricane Risk

(p.59) 3 A Market Analysis of Property Insurance against Hurricane Risk
At War with the Weather

Howard C. Kunreuther

Erwann O. Michel-Kerjan

The MIT Press

This chapter offers a market analysis of property insurance against hurricane risk, focusing on four states: Texas, Florida, New York, and South Carolina. It examines the structure, conduct, and performance of the homeowners’ insurance markets in the four states, with emphasis on recent market developments. It shows that the number, size, and distribution of firms within an industry or market are strongly determined by the cost conditions facing firms. In addition, property insurance markets in areas that are prone to hurricanes have undergone a major restructuring. Insurance premiums have increased dramatically in Florida and other coastal areas in response to the loss shocks from the 2004–2005 storm seasons and greater hurricane risk. Also in Florida, insurers’ cumulative total profits have been negative between 1985 and 2006.

Keywords:   property insurance, homeowners’ insurance, Texas, Florida, New York, South Carolina, hurricanes, insurance premiums, profits, hurricane risk

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