Catastrophe insurance and the case for compulsory coinsurance

The effect of coinsuranceThis entry presents an interactive tool by which you can study the effects of “coinsurance” on expected losses from catastrophe. ┬áThe short version is that coinsurance can, under the right circumstances, significantly reduce expected losses from tropical cyclones. As such, legislatures in coastal states, including Texas, should strongly consider prohibiting subsidized insurers such as TWIA, from selling windstorm insurance policies unless there is a significant amount (say 10%) coinsurance. ┬áThe rest of this blog entry explains why and demonstrates the tool.

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