Response to Natural Disasters

The 1990s have seen a string of disasters in the United States which has put a considerable burden on the insurance industry and which has taken its toll in economic terms, as well. Entire towns may cease to exist as a result of the 1993 floods in the Midwest, and in Southern California, employers and employees have found new ways to commute and meet their responsibilities following an earthquake in 1994.

The economic burden that assistance places on local, state and the federal government is also significant, and a number of natural disasters severely hampers the ability of the government agencies designed to assist victims to carry out their responsibilities. Better preparation and lessons from previous disasters can help mitigate effects of disasters in the future.

Natural disasters come in many forms: floods, fires, earthquakes, tornadoes, volcanic eruptions and landslides are but a few of the calamities that people endure. It is when nature comes into conflict with humans that catastrophe results. The response to these natural disasters has been to invest in early warning systems in o

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o suggest that the American insurance industry is suffering losses across the board. Profits are still being made, but have fallen from their previously high levels. Net income for American property and casualty insurers was approximately $5 billion in 1992, a decrease of one-third from 1991. More than $23 billion was paid out for catastrophes (which also included the Los Angeles riots and the World Trade Center bombing, both manmade calamities), resulting in the unanticipated loss for the industry (Lehren 34). Because insurance companies generally offer high rates of return at relatively low risk, they are favorite investment instruments for managers of pension funds. As their profitability falls, the value of the pension funds also fall, with the result that pension funds suffer as a result of the losses in the insurance industry (McLeod 3). Additionally, the insurance industry is unwilling to absorb the losses that natural disasters bring, and typically raise premiums for their policyholders. Sometimes these premium increases take place across the entire customer base; in other cases, the insurance companies increase premiums for those areas that are at greatest risk for disaster (Steinmetz A2). Midwest Floods (1993) In
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Approximate Word count = 2506
Approximate Pages = 10 (250 words per page)

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