Marcus Radetzki

Private Arrangements to Cover Large-scale Liabilities Caused by Nuclear and Other Industrial Catastrophes

Nuclear and other industrial activities create rare likelihoods for very large catastrophes. Available insurance, intra-industry pooling of risk and the net worth of those who cause the risk, provide an inadequate coverage for compensation of third-party damage. In OECD countries, the top layer of damage compensation after such catastrophes is regularly transferred, explicitly or implicitly, to governments. This constitutes a subsidy of the risk-creating industries. For a variety of reasons, traditional insurers are unwilling to assume full liability for the potentially colossal damage of industrial catastrophes. Such risks could be offloaded to the immensely larger capital market through the issue of catastrophe bonds. This would obviate the need for public subsidy, and provide a means for market pricing of the risks, but considerable needs for public intervention would nevertheless remain.

Genes and Insurance: Social insurance in the modern welfare state: emergence, maturity and partial dismantling

Introduction The rapid progress of genetic science has little bearing on the collective and obligatory social insurance systems that have been built up to cover the costs of illness and disability, to assure the households income levels in the event of the breadwinners premature death, and to provide for a pension during old age. The reason is that these systems do not differentiate between the insured according to individual risks. The entire collective is provided with the same extent of cover, while premiums and benefits are regularly differentiated on the basis of income not of risk. But circumstances are changing, as the public systems are restructured and partially dismantled. Developments during the 1990s have comprised some privatisation of social insurance, while those parts that remain in the public domain have been individualised and exposed to competition in considerable measure. We claim that, to function properly, the structure that is now evolving will be forced to differentiate the premiums it charges, or the comprehensiveness of cover it offers, in accordance with individual risks. At the same time, genetic science is making progress in strides. As shown in chapter 2, there are still important uncertainties about the ultimate potential of genetics for determining individual insurance risks. In that chapter, therefore, we juxtapose a cautious versus a bold scenario in this regard.