Howard Charles Kunreuther

University of Pennsylvania
Wharton School

563 Jon M. Huntsman Hall
3730 Walnut St.
Philadelphia, PA
19130 |  Visit Personal Website

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Howard C. Kunreuther is the James G. Dinan Professor; Professor of Decision Sciences and Business and Public Policy at the Wharton School, and co-director of the Wharton Risk Management and Decision Processes Center. He has a long-standing interest in ways that society can better manage low-probability, high-consequence events related to technological and natural hazards. He is a Coordinating Lead Author on the chapter on Risk and Uncertainty Assessment for the Intergovernmental Panel on Climate Change (IPCC) 5th Assessment Report and a Fellow of the American Association for the Advancement of Science, and a Distinguished Fellow of the Society for Risk Analysis. His most recent book is Insurance and Behavioral Economics: Improving Decisions in the Most Misunderstood Industry (with Mark Pauly and Stacey McMorrow 2013).

Abstract: The Role of Insurance in Reducing Losses from Extreme Events: The Need for Public–Private Partnerships Howard Kunreuther Wharton School, University of Pennsylvania, Philadelphia, PA 19104, U.S.A. E-mail: This paper describes the challenges that consumers, insurers and insurance regulators face in dealing with insurance for low-probability, high-consequence events. Given their limited experience with catastrophes, there is a tendency for all three parties often to engage in short-term intuitive thinking rather than long-term deliberative thinking when making these insurance-related decisions. Public–private partnerships can encourage investment in protective measures prior to a disaster, deal with affordability problems and provide coverage for catastrophic risks. Insurance premiums based on risk provide signals to residents and businesses as to the hazards they face and enable insurers to lower premiums for properties where steps have been taken to reduce risk. To address issues of equity and fairness, homeowners who cannot afford insurance could be given vouchers tied to loans for investing in loss reduction measures. The National Flood Insurance Program provides an opportunity to implement a public–private partnership that could eventually be extended to other extreme events. The Geneva Papers (2015) 40, 741–762. doi:10.1057/gpp.2015.14 Keywords: natural disasters; flood insurance; earthquake insurance; disaster insurance; terrorism; public–private partnerships

Substantive Focus:
Environmental Policy PRIMARY
Social Policy SECONDARY

Theoretical Focus:
Policy Analysis and Evaluation PRIMARY