Edited by John Raymond LaBrosse, Rodrigo Olivares-Caminal and Dalvinder Singh
With the financial crisis, the amount of subsidies provided by government has increased considerably. Governments also provide compensation in other types of crises, for example after a natural catastrophe. We argue in this chapter that the economic approach towards compensation of victims in case of natural catastrophes can also provide an important contribution to the interventions of a government during the financial crisis. That is, also for risks emerging from the financial crisis, insurance may provide an attractive solution. In a recent paper Michel-Kerjan has programmatically pointed to this idea: [T]he matter of financing large-scale disasters has relevance for many other catastrophes: hurricanes, earthquakes, pandemics, terrorist attacks, technological accidents, and even financial crises [emphasis added]. In all of these settings, one fundamental question arises: Who will pay for the economic consequences of future catastrophes and how best to organize this payment? . . . Catastrophe economics, which seeks to shed light on these issues, is likely to become a more significant field of research in the coming years.
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