Pros and Cons of the Private Insurance Industry

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1. Introduction
Extreme weathers, such as storm, floods, heat waves, drought, glacial retreat, have suffered human-being and threaten the life, properties and economies for a long time. In recent years, a significant increase is observed in the extreme weathers, such as the number of heavy precipitation events, more intense and longer drought/heat waves as a consequence of anthropogenic influences (IPCC, 2011). In particular, intensification of extreme precipitation is likely to lead extreme coastal high water associated with an increase in mean sea level. On the other hand, there might be positive results from global warming, such as improved agriculture in some high latitude regions (Mendelsohn, 2006), but economic losses from weather- and climate-related disasters have obviously increased (IPCC, 2011). Munich Re (2005), a global reinsurance company (reinsurance: an insurance purchased by insurers from other insurers to minimise the total loss that an insurer would involves.), reported that the number of natural catastrophes in 1990s is 4.5 times greater than in the 1960s; and economic losses are 8 times greater.
Accordingly, serious or irreversible losses and damages associated with adverse effect of climate change also have threaten private sectors. In particular, insurance industry, the world’s largest industry, with £2.9 trillion in revenues, 7 per cent of the global economy (Mills, 2012), has been more strongly influenced by extreme weathers because insured receive premium if there is a loss or damage in the property by the extreme events. Munich Re (2005) reported that insured losses in 1990s are 15 times greater than the 1960s. Consequently, it is no doubt that insurance sector is one of the most vulnerable economic sect...

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