Some aspects of the economics of catastrophe risk insurance

The ability to share risk efficiently in the economy is essential to welfare and growth. However, the increased frequency of natural catastrophes over the last decade has raised once again questions associated to the limits of insurability in a free markets economy, and to the relevance of public interventions on risk-sharing markets. This chapter explores the potential reasons for the lack of insurance specifically associated to catastrophe environmental risks. The final aim is to link each source of possible market inefficiency to its possible remedies.