Natural disaster insurance: public-private sector partnership

Tülin Altun; Nevzat  Güldiken

doi:10.14687/jhs.v16i3.5843

Authors

Tülin Altun Cumhuriyet University
Nevzat Güldiken Cumhuriyet University

DOI:

https://doi.org/10.14687/jhs.v16i3.5843

Keywords:

Natural disaster insurance, public-private partnerships, mandatory participation, risk-based premiums, risk-mitigation, risk transfer mechanisms

Abstract

The public sector should intervene in the natural disaster insurance market in order to increase economic efficiency and social welfare. However the governments should not put at risk the sustainability of public finance by undertaking excessive financial risks. Therefore, public-private sector partnership practices in natural disaster insurance are on the agenda. Public-private partnerships can incorporate some of the advantages of both public insurance systems and private insurance systems. In such insurance systems, government guarantees, fiscal incentives, regulations and private sector expertise come together. The insurance systems established in public-private partnership sectors should be designed appropriately to ensure sustainability. A sustainable public-private insurance system should include mandatory participation, risk-based premiums, encouraging risk-mitigation activities, risk transfer mechanisms. NFIP, CEA, CATNAT, TCIP, CCS, JER are successful examples of public-private sector partnership. However, these insurance systems do not have all the features that a good insurance system should have.

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Author Biographies

Tülin Altun, Cumhuriyet University

Assoc. Prof. Dr., Sivas Cumhuriyet University, Faculty of Economics and Administrative Sciences, Department of Public Finance

Nevzat Güldiken, Cumhuriyet University

Prof. Dr., Sivas Cumhuriyet University, Faculty of Economics and Administrative Sciences, Department of Labour Economics and Industrial Relations

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