A new report from Guy Carpenter, Marsh & McLennan Advantage, and the Wharton Risk Management and Decision Processes Center, Community-Based Catastrophe Insurance: A Model for Closing the Disaster Protection Gap, sets out an innovative model to deliver insurance and help communities close the disaster protection gap.
Insurance plays a critical role in recovery from natural disasters, but many households and small businesses do not have sufficient coverage to fund repair and rebuilding due to affordability constraints, limited risk awareness, poor understanding of insurance, or behavioral biases in decision making. There remains a persistent protection gap in the United States leaving many individuals, businesses and communities without the financial resources to repair and rebuild after a disaster.
The report highlights the importance of probabilistic catastrophe modeling and reinsurance program development. Andy Read, Vice President, Guy Carpenter, and Christopher Sykes, Managing Director, Guy Carpenter, are among the authors of the report.