this post was written with Laurence Barry, initially in French
At a time when the frequency and intensity of natural disasters are increasing as a result of global warming, the issue of disaster insurance is becoming crucial to preserving economic and social resilience in most countries. However, when we look at the various existing systems, we see that the state is usually involved in one way or another in the system that has been put in place. Far from being limited to a commercial transaction between insurer and insured, insurance against natural risks takes the form of a common good—an “insurance commons”—based on mutualization, solidarity, and collective governance. To shed light on this issue and propose another framework for thinking about natural disaster insurance, we will draw on seminal work on hybrid property regimes and commons (Samuelson, 1954; Arrow, 1963; Ostrom, 1990; Ostrom & Ostrom, 1999), as well as economic analyses of insurance (Coase, 1960; Buchanan, 1965) and systemic risk management (Markowitz, 1952; Arrow & Lind, 1970). This theoretical positioning makes it possible to move beyond the traditional dichotomy between the public and private sectors, which has been further exacerbated by recent debates, to show how catastrophe insurance is in fact organized as a polycentric institution, where a multiplicity of actors—states, insurers, reinsurers, local authorities, and policyholders—have a role to play. A virtuous system is one in which all actors cooperate and regulate each other to ensure universal and effective protection despite climatic hazards.
Continue reading Collectively rethinking disasters