electronicsleader

  • Subscribe to our RSS feed.
  • Twitter
  • StumbleUpon
  • Reddit
  • Facebook
  • Digg

Monday, 19 August 2013

Waiting for the Next Hurricane Sandy: No Crystal Balls alas

Posted on 09:15 by Unknown
WNYC, Public Radio, has been fantastic in its following up on the results of Hurricane Sandy and pondering when the next disaster will arrive

Betting on the Next Catastrophe

Could Cat Bonds save the NFIP?

Monday, August 19, 2013

WNYC
By Janet Babin : Host, WNYC News
  • Share
  • Print
  • Email
Play
00:00 / 00:00
ListenAddDownloadEmbed
Stream m3u
  • storm NASA Enlarge
    Satellite image of Hurricane Sandy, a day before landfall. (NASA GOES Project/flickr)
Brisk sales of a relatively new financial instrument called a catastrophe bond could help governments pay for disasters.
According to the National Oceanic and Atmospheric Administration, this hurricane season is on track to be above normal. Coming just one year after Sandy, the prediction raises questions about how society could better plan to pay for the damages incurred by these furious storms.
The catastrophe bond is gaining traction with some as a way to do that.  The bonds are also becoming popular with investors, who bet on the likelihood of a hurricane, earthquake or other natural disaster occurring.

“Catastrophe bonds are a way for a firm or insurer, who’s concerned with potentially large losses, to protect themselves, by paying a premium to get a large amount back if something happens,” said Howard Kunreuther, Professor of Decision Sciences & Public Policy at the Wharton School at the University of Pennsylvania.
The market for these bonds is soaring; it’s now worth about $18 billion.  One reason they’ve become popular is because the bonds are only loosely tied to the capital markets.
 “They are uncorrelated with traditional financial risks, because the likelihood of a hurricane or an earthquake has nothing to do with Federal Reserve policy or a recession,” said Economist Robert Hartwig with the Insurance Information Institute
Last month a subsidiary of New York’s Transit Agency, the MTA floated a catastrophe bond, tied to storm surge levels.
“The timing was right,” said Steve Evans, creator of Artemis, a website that analyzes catastrophe bonds and insurance-linked securities deals.
“They had a big hit from Sandy last year.”
The MTA lost about $5 billion dollars on Sandy related costs.
But the popularity of the catastrophe bond is drawing some comparisons to the other financial instruments that played a dubious role in the financial upheaval of 2008.
“There are a lot of similarities that can be drawn to the early stages of the mortgage market and the mortgage backed securities crisis we just came out of,” said Analyst Cian Desmond with Brighton House Associates.
But Desmond stopped short of calling the catastrophe bond market a bubble.
Analysts say catastrophe bonds are considered an essential strategy for insurance companies pay and other entities struggling to pay for catastrophic losses.
“We know that when the big one hits, and it has not yet hit, but we know it’s just a matter of time, that the flood damages are going to be tremendous, and really the insurance companies are at a crossroads now in deciding what they’re going to do about that,” said John Seo, co-founder and Managing Principal at Fermat Capital Management.
A catastrophe bond might also be a way for municipalities or even the federal government to manage flood risk.  It could even help the National Flood Insurance Program to climb out of debt. The Program had to borrow $9.5 billion just to pay for Sandy-related claims.
“We do think that government programs like NFIP should evaluate purchasing cat bonds from capital markets,” said Frank Nutter, President of the Reinsurance Association of America.
“The Biggert Waters Act of 2012 does require them to evaluate that,” he added.

Tags:

  • business
  • capital markets
  • catastrophe bonds
  • disaster readiness
  • flooding
  • hurricanes
  • local news
  • mta
  • mta sandy

More in:

  • WNYC News
  • Janet Babin, Host, WNYC News

    Janet Babin is a host and reporter at WNYC.
Email ThisBlogThis!Share to XShare to FacebookShare to Pinterest
Posted in | No comments
Newer Post Older Post Home

0 comments:

Post a Comment

Subscribe to: Post Comments (Atom)

Popular Posts

  • The REAL results of all this shell game stuff with Lotteries- from the NY Times
    I would never take articles from the NY Times like this except that I am getting so angry at the way people are being encouraged to live in ...
  • SUNY Eye Care Center on West 42nd Street
    Now, this is a place that I have personal experience with--for years--and a good place to end for tonight. While I found Lenscrafters to be ...
  • Off the Wall--Rave Reviews for Frozen Yogurt in Upper East Midtown
    Oh no, not another frozen yogurt place you say.. Listen, it is August in NYC and this is the time for places like this! Besides, it gets gre...
  • From The Atlantic: Spectacular Photos of the East Side Access Project
    I  have mentioned this railroad connection project going on deep under NYC before, but here are some spectacular photos of the whole dig The...
  • Customers Have their say about J.C. Penney
    W ell, we might as well see how the problems of J. C. Penney are (or are not) reflected in Yelp reviews... Whatever other problems it is fac...
  • Tours of Macchu Picchu and Peru--from About.com
    Here are a couple of stories about visiting Macchu Picchu in Peru  This one is about choosing a tour Peru Travel Peru Travel Pla...
  • Central Synagogue, Midtown: Why This Style of Architecture?
    Yes, here we are again transported back in time to some old Synagogue in Europe probably.. I hope also to get in here some more about the re...
  • Could not resist this Library Post either--Best Books about NYC ( or SOME of the best)
    I know, I WAS signing off but this post from the New York Public Library is so germane to my blog that I had to share this... Here Is New Yo...
  • How Accurate are Standardized Tests, and Who Decides This?
    M ayor Bloomberg and a lot of other important people here were upset and disappointed when , using new criteria, test scores for NYC student...
  • Waitng for the Next Hurricane Sandy: Report on the first one
    9 Key Findings From the Sandy Task Force Monday, August 19, 2013 By Stephen Ne...

Categories

  • Union Square July 20 2013

Blog Archive

  • ▼  2013 (500)
    • ►  September (123)
    • ▼  August (322)
      • Upper West Side- Big Daddy's
      • Upper West Side- Hotel Newton
      • Upper West Side Banana Republic
      • Upper West Side- Cardinal Camera
      • Upper West Side- The Parlour Pub
      • Upper West Side -The Kosher Marketplace
      • Upper West Side Whole Foods
      • Upper West Side Days Hotel
      • Upper West Side Brooks Brothers
      • UpperWestSide-Bway&96thStreet--Surrounding Sights
      • Issac Asimov's 1964 Predictions for 2014-- From Op...
      • Karen Horney Clinic
      • Ads plastered over for the Goldbergs this Fall
      • Antiques in Greenwich Village
      • Le Pain Quotidien, Greenwich Village
      • From WNYC: About the career of the woman who may w...
      • United Cerebral Palsy of New York
      • Turtle Bay- neighborhood bar it seems
      • Ipad Art--Breaking Story, and then a tale from a y...
      • Kidville in the Village
      • Sculpture Old and New
      • The Kips Bay "Alphaville" Area Revisited--Urban Al...
      • From CBS News: Photos of NYC's old Penn Station
      • From a blog called Violent Rhymes: Essential Hosti...
      • From the New York Public Library- Blog- Origins of...
      • Solar energy and hydrogen
      • Solar compactors and solar energy...
      • Food workers protest in Union Square...
      • Big Belly Solar Compacters...solar compacters in g...
      • The Smith
      • Queensboro Hardware
      • Yigal Azrouel
      • Lenscrafters Midtown East
      • City Crab and Seafood (Steaks too it says)
      • L'Express- Bouchon
      • Buttercup Bake Shop Midtown East
      • Just Another Footnote to Life in the Big Apple: pe...
      • Vince 89 Mercer..wait, do they mean Vince Camuto? ...
      • Serafina
      • La Maison du Chocolat
      • BIG cinema-- unsual and also Asian films on East 5...
      • A Message of Remembrance from a Facebook Friend
      • Big Apple Frozen Yogurt...I know, this will be las...
      • The Stag's Head
      • Lilly Pulitzer
      • Missoni PLUS British "Business of Fashion" Article...
      • rug&kilim
      • Day& Meyer Murray&Young
      • 50th Anniversary of "I Have a Dream"-- from NBC News
      • Tech Radar story on Google Glass
      • Mayoral Race- Supermarket Head John Catsimatidis,...
      • Ali Baba
      • Jos A Bank
      • Guess Fifth Avenue
      • Coach bags etc.
      • From WNYC-- The Bossless Office
      • Taking a Break-- Midtownblogger will resume either...
      • The Universal Struggle for Human Rights-- Martin L...
      • Pink Madison Avenue
      • Bikes on the Streets
      • Armani XChange Fifth Avenue
      • More in the Subway Musicians Series
      • New York.com's Guide to the Best Secrets of the Me...
      • The Metropolitan Museum- And the Billion Dollar Do...
      • Some Strikingly Simple and Compelling Photos Back ...
      • Lego Rockefeller Center
      • Clark's --Fifth Avenue has no reviews, so we do Th...
      • Aritzia
      • Michael Kors
      • Cole Haan
      • Bike Messengers Must Have Licenses? Accidents prov...
      • J. Crew
      • Ann Taylor
      • Hotel Roosevelt
      • Build a Bear? This Sounds Expensive
      • Redken on Fifth Avenue- Course and Laboratories
      • OK, No Labor Day Parade for Mayoral Hoprefuls-- bu...
      • New York Fifth Avenue Rents Second Only to Hong Kong
      • Update on Rockefeller Center-Saks Fifth Avenue and...
      • A Visit to "The Gluckmans"-- A Little Personal Not...
      • Bus on First Avenue--Yelper's Love the Tour called...
      • Sweet Violinist in Subway
      • Dublin Hotel and Tap Room
      • Apthorp Apartments-- Amazing Old Place on Upper Br...
      • From Forgotten NY: S. Klein Department Store on Un...
      • People in Traffic Island, Broadway on the Upper We...
      • First Baptist Curch
      • Oh yeah, Boardwalk Empire
      • Designer Shoe Warehouse- Upper West Side, Broadway
      • Cafe at 79th Street Boat Basin
      • 79th Street Boat Basin Upper West Side
      • NYC Grid....
      • 66th Street East Side Big White Brick Apartment Bu...
      • Kennedy Child Study Center on East 67th Street
      • Ace Hotel--Flatiron/Midtown
      • Zaro's Grand Central
      • Anti-Zionist Jews Demonstrate
      • The Christian Herald
      • Architecture Notebook: Woman behind the Seagram's ...
      • East River Esplanade- Rainy Day with Helicopter
    • ►  July (55)
Powered by Blogger.

About Me

Unknown
View my complete profile