ABSTRACT
This chapter addresses the following questions: why are we in a new era of catastrophes, what are the decision processes that explain why decision makers fail to undertake protective measures prior to a disaster, what are guiding principles for insurance to encourage loss prevention prior to a disaster and what long-term roles can the private and public sectors play if these guiding principles are implemented. It considers the examples from the United States to illustrate many of these points but the general concepts are relevant to countries in other parts of the world. Insurance can play a key role in providing property owners or renters with protection should they suffer a loss. The proposed risk management strategy involves: Framing the problem, Role of the public sector, and Multi-year insurance. Introducing a two-year insurance policy into the menu of contracts also increased the aggregate demand for disaster insurance.
