Your SlideShare is downloading. ×
0
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Falaschetti (cft law insurance summit) 20130127   insurance and the environment
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Falaschetti (cft law insurance summit) 20130127 insurance and the environment

964

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
964
On Slideshare
0
From Embeds
0
Number of Embeds
4
Actions
Shares
0
Downloads
1
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. INSURANCEGOOD FORTHEECONOMY ANDTHE ENVIRONMENTDr. Dino FalaschettiExecutive DirectorProperty & EnvironmentResearch CenterPERC.org
  • 2. ALMOST NO ONE HAS EVER BEEN RICHwhy, and how can insurance help?www.doctorfal.comInsurance Market Summit 2013
  • 3. INSURANCE & ECONOMIC PERFORMANCE• Why are public bathrooms so dirty?• Cleaning bathrooms takes time and effort…and isunpleasant!• We thus tend to avoid it, especially when relatively littlepersonal benefit can be enjoyed.www.doctorfal.comInsurance Market Summit 2013
  • 4. INSURANCE & ECONOMIC PERFORMANCE• Why is economic prosperity only a recent phenomenon?• Institutions for private property started to take hold only afew hundred years ago.• Where they have taken hold, people face not only the costsof their actions, but also enjoy personal benefits.www.doctorfal.comInsurance Market Summit 2013
  • 5. INSURANCE & ECONOMIC PERFORMANCE• Why is insurance important for economic performance?• By facilitating the free exchange of risk exposures, insurancecan mitigate risks before-the-fact and efficiently distributerecovery costs afterward.• In other words, by helping people avoid costs that haverelatively little to do with their own decisions, insurance canfurther the set of institutions that align costs and benefits.www.doctorfal.comInsurance Market Summit 2013
  • 6. INSURANCE GETS IT RIGHT!• Insurance helps align costs and benefits, at least in principleand oftentimes in practice.at least in principlewww.doctorfal.comInsurance Market Summit 2013
  • 7. INSURANCE GETS IT RIGHT!• A recent BIS working paper (von Peter et al. 2012) highlights the“macroeconomic value” of insurance contracts in a world prone to “majornatural catastrophes.”• This value is created before-the-fact by offering and enforcing productiverules (e.g., efficient building codes), and afterward by channeling resources tohigh productivity uses.• Though not immune from political pressures, private insurance can be moreproductive on these dimensions than are public alternatives.• In other words, the greatest value of insurance may be in its economicgovernance services.at least in principlewww.doctorfal.comInsurance Market Summit 2013
  • 8. EASY ECONOMICS MEETS HARD POLITICS• Why is this scientifically sound, and even common sense,economic prescription so difficult to implement politically?• Many people are happy taking a bigger slice from a shrinkingpie, and political campaigns provide strong incentives toserve them.• Distributional conflict over insurance and environmentalpolicies appears considerable, exposing both sectors to highlevels of political risk.www.doctorfal.comInsurance Market Summit 2013
  • 9. POLITICAL RISK ISTHE BIG HURDLE• Understanding this interaction between economics andpolitics can help policy entrepreneurs turn negative-sumredistributions into mutual benefits for insurance, theeconomy, and environment!can green-wrapping insurance policy help?www.doctorfal.comInsurance Market Summit 2013
  • 10. POLITICAL RISK ISTHE BIG HURDLE• Green wrapping policies that weaken economic performancecan nevertheless strengthen one’s electoral prospects in termsof who wins and loses from associated political distributions.can green-wrapping insurance policy help?www.doctorfal.comInsurance Market Summit 2013
  • 11. POLITICAL RISK ISTHE BIG HURDLE• If green wrapping bad economic policies makes political sense,then why not good economic policies? And insurance is goodfor the economy and environment!can green-wrapping insurance policy help?www.doctorfal.comInsurance Market Summit 2013
  • 12. GROWTH IS GREEN• Economies can grow only if people continually make morewith less.• But “more with less” is not only sustainable, it is the definitionof conservation.• If growth is green, and insurance strengthens economicperformance, then insurance is green too!and insurance helpswww.doctorfal.comInsurance Market Summit 2013
  • 13. INCOME ANDTHE ENVIRONMENT(Yandle et al. 2004)www.doctorfal.comInsurance Market Summit 2013
  • 14. INSURANCE FORTHE ENVIRONMENT• Opportunities also exist for insurance entrepreneurs to dowell for themselves by doing good for the environment, and inways that can be less sensitive to inefficient distributionalconflict.• Assurance contracts for energy exploration(Orlando 2012) andfisheries (Falaschetti 2013)• Extending RMS-type wind bonds (Palm 2008) to environmentalapplications (e.g., forest fires, weather, agriculture)• Hedge fund strategies (e.g., EKO Asset Management Partners)www.doctorfal.comInsurance Market Summit 2013
  • 15. • An efficient insurance sector can improve environmentalquality by strengthening economic performance.• Contracting in general, and insurance in particular, playsan important role in economic performance.• Whether this role is productive, in turn, depends onwhether institutions for private property exist.• These institutions can directly improve environmentalquality, and do so indirectly by increasing demand forenvironmental quality.www.doctorfal.comInsurance Market Summit 2013INSURANCE,THE ENVIRONMENT, &A MORE PRODUCTIVE POLITICAL ECONOMY
  • 16. • Innovative environmental insurance and financial services alsooffer these benefits, and do so more directly forenvironmental quality.• Realizing these efficiency gains is impossible, however, withouta productive political-legal foundation.• Highlighting the environmental benefits of insurance canbroaden constituent support for economically soundinsurance policywww.doctorfal.comInsurance Market Summit 2013INSURANCE,THE ENVIRONMENT, &A MORE PRODUCTIVE POLITICAL ECONOMY
  • 17. BIBLIOGRAPHY• Baron, David P. (2006). Business and its Environment, 5th Edition. Upper Saddle River, NJ: Pearson Prentice Hall.• Falaschetti, Dino (2009). Democratic Governance and Economic Performance: How Accountability GoesToo Far in Politics, Law, andBusiness. NewYork: Springer.• Falaschetti, Dino (2013). Global environmental governance: Mechanism design lessons from corporate governance. PERC ResearchPaper 13-2 and FSU College of Law, Law, Business & Economics Paper.Available at ssrn.com/abstract=2199573.• Falaschetti, Dino and Laura Huggins (2012). Green wrapping expensive environmental policies.Townhall.com, December 19.• Falaschetti, Dino and Michael J. Orlando (2008). Money, Financial Intermediation, and Governance. Edward Elgar Publishing.• Friedman, David D. (2000). Law’s Order:What Economics Has to Do with Law and Why It Matters. Princeton University Press.www.doctorfal.comInsurance Market Summit 2013
  • 18. BIBLIOGRAPHY• Galor, Oded (2005).“From Stagnation to Growth: Unified GrowthTheory.” In P.Aghion and S. Durlauf (eds.) Handbook of EconomicGrowth, North-Holland.• Gilson, Ronald J. (1984).Value creation by business lawyers: Legal skills and asset pricing.Yale Law Journal, 94(2), 239-313.• Grossman, Gene M. and Alan B. Krueger (1995). Economic growth and the environment. Quarterly Journal of Economics, 110(2),353-77.• Orlando, Michael J. (2012). Financial assurance for environmental protection:Trends and opportunities. PERC Research Paper 12-17.Available at ssrn.com/abstract=2141337.• Palm,Anika Myers (2008).Weather stations could help insurers assess storm damage. Orlando Sentinel, July 25.• von Peter, Goetz, Sebastian von Dahlen, and Sweta Saxena (2012). Unmitigated disasters? New evidence on the macroeconomiccost of natural catastrophes. BIS Working Paper No. 394.Available at www.bis.org.www.doctorfal.comInsurance Market Summit 2013
  • 19. BIBLIOGRAPHY• Weil, David N. (2005). Economic Growth. Addison Wesley.• Yandle, Bruce, Madhusudan Bhattarai, and MayaVijayaraghavan (2004). Environmental Kuznets Curves:A review of findings, methods,and policy implications. PERC Research Study 02-1 (Update).www.doctorfal.comInsurance Market Summit 2013
  • 20. ABOUTTHE SPEAKERThrough 20 years of experience in business, policy, and inter-disciplinary research and teaching, DinoFalaschetti (PhD, MBA, CPA) managed Fortune 100 audit-engagements and corporate financeoperations, created insightful business analytics and litigation support strategies, and helped developproductive policies for the White House and state legislatures.Dr. Falaschetti now serves as Executive Director of the Property & Environment Research Center(PERC), a think tank that applies economic principles to solve environmental problems. He alsoserves as Special Consultant to Economists Incorporated, a premier economic consulting firm for lawand economics, public policy, and business strategy, and as Adjunct Professor for the Florida StateUniversity College of Law and University ofTexas at Arlington College of Business.Dr. Falaschetti previously served the Executive Office of the President as Senior Economist for the Council of EconomicAdvisers (under President George W. Bush and Chairmen Ben Bernanke and Edward Lazear), held endowed, tenured,and research faculty appointments in economics, finance, law, and policy at the University of California at Berkeley, FloridaState University, Montana State University, Seattle University, Stanford University, University ofTennessee, and WashingtonUniversity in St. Louis, and managed a $1 billion money market portfolio, foreign currency exposures, and businessvaluations for a Fortune 100 conglomerate. He continues to share his opinions on business, law, and politics throughpublic and professional speeches, radio and television interviews, and other news and policy media.He earned a PhD in economics from Washington University in St. Louis (with fields in political economy, economictheory, and industrial organization), an MBA with high honors from the University of Chicago Booth School of Business(with concentrations in economics and finance), and a BS with distinction from the Indiana University Kelley School ofBusiness (with a major in accounting and work-in-depth in philosophy).www.doctorfal.comInsurance Market Summit 2013

×