Scholarly record

COMPARATIVE ANALYSIS OF DIFFERENT FINANCIAL PROTECTION SCHEMES AGAINST NATURAL DISASTERS

L. E. Naghi, R. Mihai, N. Radu

Abstract

In the last 40 years, damage to natural disasters has registered a 14-fold increase. Since 1990, losses from natural disasters have exceeded 700 billion USD, and 70% of global economic losses are still uninsured. The existence of such large deficits proves that market mechanisms have not been very effective, and if this trend continues, it is estimated that around 2065 the world will spend all the economic growth accumulated with the response to these disasters. Financial resilience, especially in the case of developing countries, is therefore crucial. Governments are becoming more and more interested in adopting financial resilience measures and setting up accessible insurance schemes with direct addressing to those at high exposure risk. The implementation of such schemes is a complex process that requires a very good understanding of both the risks and the specific social, economic and political objectives. Intervention by governments and intergovernmental organizations is required to generate financial protection mechanisms to cover this deficit. 2017 was the year with the largest unsecured loss as a result of natural disasters in history, reaching $ 180 billion. Protection schemes to cover the financial protection deficit meet the same goal - to be a strategic response solution to provide the funds needed for natural disaster recovery. From an organizational point of view, there are considerable differences: governance; the number of covered risks; risk solution; way of financing or combinations of these. The strategy of each one takes into account the specific issues to be answered: taking the risk from the other players on the market; risk financing; socio - political objectives. This paper aims to analyze existing schemes highlighting those advantageous elements that can be replicated by any national market.

Publication details

Back to publication list