New Findings from Vrije University in the Area of Disaster Risk Reduction Described (A global review of the impact of basis risk on the functioning…

New Findings from Vrije University in the Area of Disaster Risk Reduction Described (A global review of the impact of basis risk on the functioning of and demand for index insurance)

By a News Reporter-Staff News Editor at Politics & Government Week -- New research on Disaster Risk Reduction is the subject of a report. According to news reporting out of Amsterdam, Netherlands, by VerticalNews editors, research stated, "Climate change is increasing the risks of weather-related disasters in many regions around the world. This has an adverse socio-economic impact on households, farmers and small businesses."

Our news journalists obtained a quote from the research from Vrije University, "Some strategies for effectively managing climate related disasters include index based insurance products, which are increasingly offered as alternatives to traditional insurance, particularly in low-income countries. However, the uptake of index insurance remains low, which can be partially attributed to the inherent problem of basis risk. This review assesses the problem of basis risk that occurs when insurance payouts depend on an index that is imperfectly related with actual losses experienced by the insurance policyholder. Special attention is paid to the design of the index, quality and sampling data, the estimation of basis risk and its influence on insurance demand, and index-insurance supply. The paper concludes with several policy recommendations including the need for a systematic approach to quantify the magnitude of basis risk, to inform index design with participatory approaches, to offer index insurance through existing risk sharing networks."

According to the news editors, the research concluded: "Moreover, we recommend to improve policyholders access to information about their risk and measures they can take to limit risk, create an enabling environment for a well-functioning insurance market, and lastly to have an integrated approach that incorporates insurance with other mechanisms that reduce basis risk."

For more information on this research see: A global review of the impact of basis risk on the functioning of and demand for index insurance. International Journal of Disaster Risk Reduction, 2018;28():845-853. International Journal of Disaster Risk Reduction can be contacted at: Elsevier Science Bv, PO Box 211, 1000 Ae Amsterdam, Netherlands. (Elsevier - www.elsevier.com; International Journal of Disaster Risk Reduction - www.journals.elsevier.com/international-journal-of-disaster-risk-reduction/)

Our news journalists report that additional information may be obtained by contacting K.Y. Clement, Vrije Universiteit Amsterdam, Inst Environm Studies, Dept. of Environm Econ, NL-1081 HV Amsterdam, Netherlands. Additional authors for this research include W.J.W. Botzen, R. Brouwer and J. Aerts.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.ijdrr.2018.01.001. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

Keywords for this news article include: Amsterdam, Netherlands, Europe, Disaster Risk Reduction, Vrije University.

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