Catastrophe Insurance and the Arts of Urban Governance

Authors: Stephen Collier*, The New School, Savannah Cox*, University of California - Berkeley
Topics: Urban and Regional Planning, Political Geography
Keywords: Insurance, Risk, Vulnerability, Disaster, Urban Planning
Session Type: Paper
Day: 4/10/2018
Start / End Time: 12:40 PM / 2:20 PM
Room: Napoleon, Marriott, River Tower Elevators, 41st Floor
Presentation File: No File Uploaded

This article examines the role of catastrophe insurance in contemporary arts of urban governance. In particular, it examines the increasingly important role of private insurance mechanisms in shaping urban resilience policy, and the growing prominence of private reinsurance companies as advocates for such policies. The first part of the article examines the origins of catastrophe insurance, tracing how a novel set of tools for assessing and distributing catastrophic risk were developed in the public sector to govern urban vulnerability. In the 1960s, the US federal government instituted public catastrophe insurance—specifically flood insurance—to address what was perceived to be the incalculability of catastrophe risks, and the unwillingness of private insurers to cover them. Catastrophe insurance, in short, was born as a public answer to market failure. The picture has since changed. On the one hand, private insurers increasingly express a desire and capacity to underwrite catastrophe risks. On the other hand, concerns with uncontrollable catastrophe risk produced by the failure of private markets have been at least partially displaced by concerns with uncontrollable moral hazard generated by public insurance. But as the second part of the article shows, the result is not the “privatization” of catastrophe risk, but a new interplay between private insurance and government. In particular, private insurance companies are beginning to shape collective actions to address urban resilience, through mechanisms such as actuarial rate-making; new insurance and reinsurance products issued to urban governments, utilities, and authorities; catastrophe bonds and other urban finance mechanisms; and “knowledge leadership.”

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