risk management | August 13, 2012

How the Weather Affects Our Economy: Erwann Michel-Kerjan

Erwann Michel-Kerjan has spent a lot of time thinking about how our increasingly-unpredictable weather affects our economy in tangible ways. That explains why Michel-Kerjan, a sought-after risk management speaker, is happy with the work done in Congress last month. The National Flood Insurance Program was renewed for another five years—meaning that Congress is considering risk-based rates for insurance programs.

This dovetails with two principles outlined in Michel-Kerjan's prescient book At War with the Weather, namely that insurance premiums ought to reflect risk so people know how safe they are, and that special treatment given to consumers at risk should come from the general public as opposed to insurance premium subsidies.

The risk-based pricing, Michel-Kerjan says, can act as an incentive to communicate risk to those who live in hazardous regions. If the legislation passes in July, it will prompt a widespread change in how we approach hazardous areas, demanding a more comprehensive approach to risk information and dissemination—two topics that Erwann Michel-Kerjan can speak about with authority and verve.

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milestones | August 09, 2012