Fascinating article on the pre-Covid-19 development of a pandemic insurance product by an epidemiological modeling firm called Metabiota, the reinsurance firm Munich Re, and insurance broker Marsh…
Category Archives: Catastrophes
Terrorism risk insurance
Clearly insurance is an enabling technology; without insurance many if not most large-scale commercial activities would grind to a halt. In a Business Week article entitled “The Unexpected Threat to Super Bowl XLIX“, Wharton professors Howard Kunreuther and Erwann Michel-Kerjan point out that that if Congress decides not to renew the Terrorism Risk Insurance Act (TRIA) (set to expire on Dec. 31), there is a chance that the Super Bowl might not be played. Will Warren Buffet step in as an insurer of last resort if TRIA is not reauthorized? Also, Gordon Woo raises some excellent points about possible private sector alternatives to TRIA in his blog posting entitled “RMS and the FIFA World Cup: Insuring Against Terrorism“.
Assorted Links (6/14/2010)
Here’s a list of articles that I have been reading lately:
Stephen A. Blumenthal: It’s Time to Nationalize Fannie and Freddie – WSJ.com
online.wsj.com
“In The Wall Street Journal, Stephen A. Blumenthal writes that any solution that allows private companies to have a special relationship to government is destined to fail.”
Think Smarter About Risk – WSJ.com
online.wsj.com
“Moshe A. Milevsky says in The Wall Street Journal that when gauging risk, too many investors don’t consider the most important asset: their human capital.”
Opening weekend – 2010 World Cup – The Big Picture – Boston.com
boston.com
“The 2010 FIFA World Cup opened last Friday in South Africa, after years of preparation, with an Opening Ceremony at Soccer City Stadium – the first matches taking place over the weekend.”
Foreign Tax Bill Likely, But ‘A Bad Idea,’ Validus CEO Says
highlinedata.com
“NEW YORK-Proposed legislation denying tax deductions for reinsurance premiums paid to offshore affiliates will likely pass through Congress, a Bermuda executive predicted here yesterday, but he criticized the measure as a restriction of free trade.”
“‘Regulating Wall Street’ Co-Editor and NYU economics professor Thomas Cooley breaks down the pros and cons of stimulus spending…”
Gerald O’Driscoll: The Gulf Spill, the Financial Crisis and the Failure of Big Government – WSJ.com
online.wsj.com
“In The Wall Street Journal, Gerald P. O’Driscoll notes that Republicans and Democrats fail to see the limits of centralized regulation in a modern market economy.”
Dynamic Dr. Krugman|KeithHennessey.com
KeithHennessey.com
“In his column today Dr. Paul Krugman argues that the deficit impact of a large ($1 trillion) stimulus would be mitigated by the effects of higher GDP growth.”
Women Prefer Men Holding State Bonds, Japan Ad Says (Update1) – Bloomberg.co.jp
Bloomberg.co.jp
“June 9 (Bloomberg) — Japanese women are seeking men who invest in government bonds, according to an advertisement being run by the Ministry of Finance.”
The Road to Price Controls — The American, A Magazine of Ideas
www.american.com
“Conventional wisdom is that U.S. pharmaceutical companies made out well under the Obama health plan by bargaining with the White House. That wisdom is wrong.”
Just How Risky Are Nuclear Industry, NASA Missions? – The Numbers Guy – WSJ
online.wsj.com
“Scientists in some risky pursuits attempt to quantify risks, which helps identify trouble spots. That might be in the future of the deep-sea oil-drilling business.”
Scenes from the Gulf of Mexico – The Big Picture – Boston.com
boston.com
“Based on recently revised estimates, BP’s ruptured oil well at the bottom of the Gulf of Mexico continues to leak 25,000 to 30,000 barrels of oil a day. The new figures suggest that an amount of oil equivalent to the Exxon Valdez disaster could still be flowing into the Gulf of Mexico every 8 to 10 days.”
Lawrence M. Krauss: Science and the Gulf Spill – WSJ.com
online.wsj.com
“In The Wall Street Journal, scientist Lawrence M. Krauss says that TV has fueled unrealistic expectations of a quick fix to the oil spill.”
Fouad Ajami: Iran and the ‘Freedom Recession’ – WSJ.com
online.wsj.com
“Fouad Ajami writes in The Wall Street Journal about the anniversary of the Iranian crackdown on pro-democracy protests that Facebook had no answer to the pro-regime vigilantes who ruled the streets. And the U.S. president, who might have helped, stood aside.”
Andy Kessler: The iPhone, Net Neutrality and the FCC – WSJ.com
online.wsj.com
“Andy Kessler writes in The Wall Street Journal that the FCC should make it easier for more companies to enter wireless data and cable broadband markets.”
Peggy Noonan: ‘We Are Totally Unprepared’ – WSJ.com
online.wsj.com
“Peggy Noonan writes in The Wall Street Journal that nine years after 9/11, there is a chilling complacency about WMD attacks.”
Charles Krauthammer – The myth of Iran’s ‘isolation’
washingtonpost.com
“Obama’s strategy against Tehran hasn’t worked.”
Don’t Believe the Double-Dippers
online.wsj.com
“Alan Reynolds writes in The Wall Street Journal that while liberals issue dire warnings to argue for more stimulus spending, Republicans embrace gloom as evidence stimulus hasn’t worked. Truth is the economy isn’t that bad.”
Obama Meets Toto
online.wsj.com
“In The Wall Street Journal, Dan Henninger writes that with the Gulf oil spill, faith in the omnipotence of government has put us in the land of Oz.”
Europe’s Determination to Decline
www.project-syndicate.org
“At a time when their economies are sputtering, European leaders have embraced the bizarre idea of further reductions in greenhouse-gas emissions. There is a strong correlation between carbon emissions and GDP growth, so, in the absence of alternatives to fossil fuels, Europeans are, in effect, calling for an even deeper recession.”
Assorted Links (5/29/2010)
Here’s a list of articles that I have been reading lately:
Charles Krauthammer – A disaster with many fathers
“Obama is as responsible for the Gulf as Bush was for New Orleans.”
Academics on What Caused the Financial Crisis – Real Time Economics – WSJ
“The Financial Crisis Inquiry Commission on Friday and Saturday heard several academic economists’ take on what led to a near-meltdown of the global economy.”
Static In Search for Cellphone-Tumor Link – The Numbers Guy – WSJ
“Why a long-term study couldn’t reach conclusive results.”
Mark Helprin: On Memorial Day – WSJ.com
“In The Wall Street Journal, Mark Helprin writes about what we owe to the fallen, and to those now serving.”
Calling a State Sponsor a State Sponsor
“A growing body of evidence points to Venezuelan dictator Hugo Chavez’s singular role in supporting terrorism and related criminality.”
“Waves & Beyond and The Gift by Jan Florence Garven: Jan Florence Garven is an artist who specializes in mixed media. She combines paper, metal, wax, textiles and found objects to convey conceptual images.”
Lighter than air – The Big Picture – Boston.com
“Fill a lightweight material with hot air, helium or hydrogen, and you have a vessel that floats in the air. People around the world use balloons, blimps and airships for transportation, to conduct research, to deliver messages, to protest, and – mostly – for having fun.”
Peggy Noonan: He Was Supposed to Be Competent – WSJ.com
“The spill is a disaster for the president and his political philosophy, Peggy Noonan argues in The Wall Street Journal.”
Obama’s Blowout Preventer – WSJ.com
“The Wall Street Journal that Interior Secretary Ken Salazar had a reform plan to prevent blowouts like the one at the Deepwater Horizon oil rig in the Gulf of Mexico.”
“Governments were the solution to the economic crisis. Now they are the problem.”
“After a yearlong effort to get it right, the U.S. Senate passed a financial overhaul bill last week that actually weakens the government’s ability to manage the next financial crisis. The House version passed last December is better, but not much.”
Assorted Links (5/29/2010)
Here’s a list of articles that I have been reading lately:
Charles Krauthammer – A disaster with many fathers
“Obama is as responsible for the Gulf as Bush was for New Orleans.”
Academics on What Caused the Financial Crisis – Real Time Economics – WSJ
“The Financial Crisis Inquiry Commission on Friday and Saturday heard several academic economists’ take on what led to a near-meltdown of the global economy.”
Static In Search for Cellphone-Tumor Link – The Numbers Guy – WSJ
“Why a long-term study couldn’t reach conclusive results.”
Mark Helprin: On Memorial Day – WSJ.com
“In The Wall Street Journal, Mark Helprin writes about what we owe to the fallen, and to those now serving.”
Calling a State Sponsor a State Sponsor
“A growing body of evidence points to Venezuelan dictator Hugo Chavez’s singular role in supporting terrorism and related criminality.”
“Waves & Beyond and The Gift by Jan Florence Garven: Jan Florence Garven is an artist who specializes in mixed media. She combines paper, metal, wax, textiles and found objects to convey conceptual images.”
Lighter than air – The Big Picture – Boston.com
“Fill a lightweight material with hot air, helium or hydrogen, and you have a vessel that floats in the air. People around the world use balloons, blimps and airships for transportation, to conduct research, to deliver messages, to protest, and – mostly – for having fun.”
Peggy Noonan: He Was Supposed to Be Competent – WSJ.com
“The spill is a disaster for the president and his political philosophy, Peggy Noonan argues in The Wall Street Journal.”
Obama’s Blowout Preventer – WSJ.com
“The Wall Street Journal that Interior Secretary Ken Salazar had a reform plan to prevent blowouts like the one at the Deepwater Horizon oil rig in the Gulf of Mexico.”
“Governments were the solution to the economic crisis. Now they are the problem.”
“After a yearlong effort to get it right, the U.S. Senate passed a financial overhaul bill last week that actually weakens the government’s ability to manage the next financial crisis. The House version passed last December is better, but not much.”
Hiroshima, 64 years ago
Today marks 64 years since the atom bomb was dropped on Hiroshima, Japan by the United States (the U.S. dropped a second atom bomb on Nagasaki, Japan just three days later). The Boston Globe has a remarkable photoessay about Hiroshima available on its “The Big Picture” website.
Finance to the Rescue
For what it’s worth, I am one of four people (along with Jeff Holland, Liongate Capital Management founder, John W. Howton Rockbrook Capital founder, and John C. Bogle, founder and former CEO of the Vanguard) interviewed in “Finance to the Rescue”, an article that appears in the Fall 2005 issue of Baylor Business Review. My interview is on the topic of cat bonds, which is a topic that I have previously blogged about.
Bush's avian flu initiative (AKA the International Partnership on Avian and Pandemic Influenza)
The White House posted the transcript of President Bush’s speech today to the United Nations. Of particular significance is the President’s announcement concerning the International Partnership on Avian and Pandemic Influenza (see http://www.whitehouse.gov/news/releases/2005/09/20050914.html for the complete transcript):
“As we strengthen our commitments to fighting malaria and AIDS, we must also remain on the offensive against new threats to public health such as the Avian Influenza. If left unchallenged, this virus could become the first pandemic of the 21st century. We must not allow that to happen. Today I am announcing a new International Partnership on Avian and Pandemic Influenza. The Partnership requires countries that face an outbreak to immediately share information and provide samples to the World Health Organization. By requiring transparency, we can respond more rapidly to dangerous outbreaks and stop them on time. Many nations have already joined this partnership; we invite all nations to participate. It’s essential we work together, and as we do so, we will fulfill a moral duty to protect our citizens, and heal the sick, and comfort the afflicted.”
]]>Bush’s avian flu initiative (AKA the International Partnership on Avian and Pandemic Influenza)
The White House posted the transcript of President Bush’s speech today to the United Nations. Of particular significance is the President’s announcement concerning the International Partnership on Avian and Pandemic Influenza (see http://www.whitehouse.gov/news/releases/2005/09/20050914.html for the complete transcript):
“As we strengthen our commitments to fighting malaria and AIDS, we must also remain on the offensive against new threats to public health such as the Avian Influenza. If left unchallenged, this virus could become the first pandemic of the 21st century. We must not allow that to happen. Today I am announcing a new International Partnership on Avian and Pandemic Influenza. The Partnership requires countries that face an outbreak to immediately share information and provide samples to the World Health Organization. By requiring transparency, we can respond more rapidly to dangerous outbreaks and stop them on time. Many nations have already joined this partnership; we invite all nations to participate. It’s essential we work together, and as we do so, we will fulfill a moral duty to protect our citizens, and heal the sick, and comfort the afflicted.”
Hurricane Katrina and the Great New Orleans Flood
Here is a collection of readings that I have been wading through (pardon the pun) in order to try to gain some perspectives on the tragedy that we see unfolding in the Gulf Coast generally and in New Orleans in particular:
1. Katrina, Cost-Benefit Analysis, and Terrorism, by Richard Posner, Senior Lecturer in Law, University of Chicago.
2. Major Disasters and the Good Samaritan Problem, by Gary Becker, 1992 Nobel Laureate in Economics, Professor of Economics at the University of Chicago and Senior Fellow at the Hoover Institution, Stanford University.
3. Rebuilding New Orleans — and America, by Thomas Sowell, Rose and Milton Friedman Senior Fellow, The Hoover Institution, Stanford University.
4. A Fuller Picture: Beginning to understand what we are seeing in New Orleans, by Michael Novak, George Frederick Jewett Scholar in Religion, Philosophy, and Public Policy at the American Enterprise Institute.
In retrospect, it would appear that the man-made aspects of the disaster are by far and away much worse than the storm itself. The initial damage report from risk modeling firm Risk Management Solutions (RMS) was $20–$35 billion. Later that same day (September 2), the levees failed in New Orleans and RMS immediately revised its estimate to $100 billion. On September 7, the Wall Street Journal published a page 1 article entitled “First Estimates on Katrina Costs For Washington Hit $200 Billion”. The biggest long term problem (at least from a loss prevention standpoint) has been a chronic underinvestment in levee protection for most of the history of the city of New Orleans. Interestingly (as noted in John Berlau’s piece entitled Greens vs. Levees), the Army Corps of Engineers was sued sometime back in the mid-90’s in order to prevent them from raising and fortifying Mississippi River levees. The Corps’ rationale for this project at the time was that it was needed “…because a failure could wreak catastrophic consequences on Louisiana and Mississippi which the states would be decades in overcoming, if they overcame them at all.”
Late today (September 8), Congress approved $51.8 billion in emergency spending to pay for Hurricane Katrina recovery efforts, and thankfully this will be directed through channels other than Louisiana public officials (see Congressman Tom Tancredo (R-CO)’s letter to Speaker Dennis Hastert (R-IL) on the problem of public corruption in Louisiana).