金融Essay作业代写范文：Roles of the Private and Public Sectors in Flood Risk Management

本文是金融专业的Essay范例，题目是“Roles of the Private and Public Sectors in Flood Risk Management（私营和公共部门在洪水风险管理中的作用）”，洪水是美国最常见的自然灾害。它们也会导致巨大的损害和损失。实际上，每个人都生活在洪泛区，但风险水平从低到高风险不等。这种损失暴露使得全国各地的房主都容易遭受巨额的维修成本和重大损失。

Introduction介绍

Floods are the most common natural disasters in the United States. They can also result in great damage and loss. Everyone actually lives in a flood zone, but the levels of risk vary from low to high-risk areas. This loss exposure leaves homeowners all across the nation susceptible to huge repair cost and substantial loss.

According to the Federal Emergency Management Agency, or FEMA which is part of the U.S. Department of Homeland Security (DHS), between 2011 and 2016 all 50 states have experienced a food or flash flood. This raises concern because it means that no single region across the U.S is immune to the risk of flooding. Just an inch of flood water can cause you thousands of dollars’ worth of damages.

There are over 13 million homes in America located in high-risk flood zones, with a 26 percent chance of flood within the duration of a 30-year mortgage[1]. This is 10 percent higher than the risk of having a fire within the same timeframe, but most homeowners wouldn’t even consider living in a home without having an insurance policy that covers damage caused by a major fire.

在美国，有超过1300万的家庭位于洪水高危区，在30年的抵押贷款期限内，有26%的几率发生洪水。这比在同一时间内发生火灾的风险高出10%，但大多数房主甚至不会考虑住在没有保险的房子里，保险包括由重大火灾造成的损失。

Developing effective mitigation and protection strategies is a challenge. The status quo is to let the National Flood Insurance Program continue to dominate flood insurance policies while leaving private insurers to be less than 10 percent of the market.

To opt-in for partial privatization of flood insurance would be to accept some government assistance while also letting private insurers offer flood insurance policies to homeowners. Full privatization is the option of completely removing government assistance and eliminating the national flood insurance program to allow the private companies to provide most of the nations need for flood insurance.

In this paper, I will discuss the options for structuring the roles of the private and public sectors in managing flood risk for homeowners and discuss the advantages and disadvantages of sticking to NFIP’s status quo, converting to partial privatization, or full privatization.

Overview概述

Flood insurance is not included in the typical homeowner’s policy, instead underwritten by the National Flood Insurance Program (NFIP), which is overseen by FEMA and has practically been the sole provider since 1968. The reason it was developed was to provide flood insurance to homeowners who were considered too high risk. Private insurers ceased writing coverages for these areas because they were of high catastrophic risk and would result in large losses. The NFIP provided these properties with protection and a sense of security. According to Diane P. Horn in collaboration with FEMA, property owners are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area, or SFHA which is equivalent to having a 1% or higher risk of flooding every year and is in a community that participates in the NFIP. However, FEMA also reports that moderate-low risk areas account for more than 20 percent of the country’s NFIP claims. They even receive a third of flood-related assistance[2]. In low and moderate risk areas, their risk of a flood is reduced but not removed. In 1968 flood was considered an uninsurable risk and the NFIP opened up possibilities for homeowners to protect against the highly probably flood loss. Their main three components include to provide flood insurance, to improve floodplain management and to develop maps of flood hazard zones.[3] The NFIP has also contributed to the enhancement of flood prevention with stricter building codes and standards.

洪水保险不包括在普通房主的保单中，而是由国家洪水保险计划(NFIP)承保，该计划由联邦应急管理局(FEMA)监管，自1968年以来实际上一直是唯一的提供者。开发它的原因是为那些被认为风险太高的房主提供洪水保险。私人保险公司停止了对这些地区的承保，因为这些地区有很高的灾难性风险，会导致巨大的损失。NFIP为这些财产提供了保护和安全感。据黛安·p·角与联邦应急管理局合作,业主需要购买洪水保险,如果他们的财产被标识为一个特殊的洪水灾害地区,或SFHA相当于每年1%或更高的洪水风险,就是参与NFIP在一个社区。然而，联邦应急管理局也报告说，中低风险地区占全国NFIP申请的20%以上。他们甚至得到了三分之一的洪水相关援助。在低风险和中等风险地区，洪水的风险降低了，但没有消除。1968年，洪水被认为是不可保险的风险，NFIP为房主提供了防范洪水损失的可能性。它们的主要三个组成部分包括提供洪水保险、改善泛滥平原管理和绘制洪水危险区地图NFIP还通过更严格的建筑规范和标准，为加强防洪作出了贡献。

Flood insurance is available to include coverage over the home for up to $250,000 and its contents for $100,000. According to FEMA’s “Flood Insurance: How It Works,” the average premium for a yearly flood insurance policy is about $700 per year. Moreover, underestimation of risk and the misconception that flood loss is included into homeowners’ insurance continues to keep homeowners unprotected. In recent years there has been an aim to make the National Flood Insurance Program more financially and structurally sound or risk phasing out.

The status quo现状

In the original NFIP statute, Congress agreed that “a program of flood insurance can promote the public interest by providing appropriate protection against the perils of flood losses and encouraging sound land use by minimizing exposure of property to flood losses.”[4] At the time of the National Flood Insurance Act implementation, it was determined that many factors made uneconomic for private insurance industry alone to make flood insurance available for all those who are in need of protection while still maintaining reasonable terms and conditions. This is the status quo that is still the case today. Less than 10 percent of flood insurance is written by private insurers.

在最初的NFIP法规中，国会同意“一个洪水保险计划可以通过提供适当的保护来防范洪水损失的危险，并通过尽量减少财产遭受洪水损失的风险来鼓励合理的土地利用，从而促进公众利益。”“[4]在实施《全国洪水保险法》时，人们认为，许多因素使得私营保险行业在为所有需要保护的人提供洪水保险的同时仍保持合理的条款和条件是不经济的。这是现状，今天仍然如此。只有不到10%的洪水保险由私人保险公司承保。

This way of managing and financing flood risk has its unique advantages. For example, it enables homeowners in both low and high-risk areas to purchases federally backed flood insurance[5]. It provides flood insurance in flood- prone areas that otherwise would not be able to obtain it, which in turn reduces the government’s cost after the event of floods. It also maintains a repository of Flood Insurance Rate Maps that are available during the planning and zoning of buildings and homes. This can be used as a preventative measure to educate a more conscious public who is aware of their risks. unlike disaster assistance and disaster home loans, NFIP payouts are not dependent on federal disaster declarations and does not need to be repaid. [6] The Reform Act of 2017 mandated coverage responsibility from individuals to lenders with links to the federal government, ultimately increasing the amount of flood insurance coverage. They’ve also managed to reduce the nations comprehensive flood risk through the development and implementation of floodplain management standards, where “adequate land use and control measures” have been adopted. [7] According to Morris & Reynolds insurance NFIP’s popular Write Your Own program allowed private insurers to sell and process flood insurance by using NFIP’s rates, rules, and regulations. The WYO program includes almost 20 insurers including well-known firms such as The Travelers, The Hartford, and Wright Flood. The NFIP is also not subject to state regulations unlike the rest of the industry.

However, things are not perfect, and there is still room for improvement in flood insurance. The NFIP prices their premiums without the typical feature of a catastrophic loading surcharge. As a result, they unavoidably accumulate massive debt during the years of the most lost. This can be evident in the financial hit the program got after hurricane Katrina, and other large storms. To continue, it also consistently fails to charge program participants rates that cover the full risk of flooding to their homes. As a result, on average revenue from premiums don’t include the number of claims in a year and the Congressional Budget Office estimates a program shortfall of $1.4 billion annually.[8] Even after Congress forgave nearly $16 billion in debt, the program still owed over $20-25 billion to the U.S Treasury. Premiums are not prices to be actuarially sound and do not reflect covered risk, they are also inaccurate and distort the cost. This can even result in moral hazard by underpricing their policies and encouraging development in flood prone areas. Robert W. Klein of Georgia State university’s Center for RMI Research suggests that the key is increasing taxpayer support for the program which would allow for premiums to rise in price without deterring at-risk homeowners from opting out of the program. [9] Kousky and Kunreuther argue in their article “Addressing Affordability in the National Flood Insurance Program,” that the NFIP must address premiums affordability, and this cannot be fixed by discounting them. Inadequate rates and underwriting have proved there is much improvement to be done. Instead, Homeowners should be required to hold their property to standard, to reduce flood loss. Wealth redistribution is also a concern. This is because taxpayer funds subsidize the cost of the few homeowners who choose to live in high-risk flood zones. This can be considered unjust and poorly designed.[10]

Partial Privatization部分私有化

Although private insurers have taken on relatively little flood risk in relation to the NFIP, they have still been involved in the program. Private insurers have administered NFIP through sales of policies and servicing of claims. Recently, thanks to the development of more advanced analytics used to better predict risk, more and more private insurers have expressed interest in working with the NFIP to tackle the managing and financing of flood risk. Some advantages this may bring to the NFIP. Some of those advantages include more flexible flood policies because they can more accurately identify and track risks and offering rates that better represent the danger that homes face. They also provide the ability for integration with homeowner’s insurance policies. They also create competition in the market offering affordable coverage to consumers in need. Increasing private coverage from the mere 10 percent it at now could also mean the reduction of the NFIP debt and necessary borrowing from the U. S Treasury. The 2017 H.R. 2874 under section 1313 included provisions that promoted private flood insurance coverage in order to strengthen the NFIP; such provision consists of the risk sharing pilot program where the “Write Your Own companies insure properties up to at least $50,000 and NFIP issues policies in excess of that coverage limit.[11]” These changes collectively would evolve the NFIP into a more effective program that will better serve homeowners in flood areas. Private capital will bring innovative products, progressive practices, all while alleviating the burden of bearing full risk and increasing expense of the NFIP. Ultimately giving Americans more options to protect their investments.

尽管与NFIP相比，私人保险公司承担的洪水风险相对较小，但他们仍然参与了该计划。私人保险公司通过销售保单和理赔服务来管理NFIP。最近，由于更先进的分析技术的发展，用于更好地预测风险，越来越多的私营保险公司表示有兴趣与NFIP合作，以解决洪水风险的管理和融资问题。这可能会给NFIP带来一些好处。这些优势包括更灵活的洪水政策，因为它们可以更准确地识别和跟踪风险，并提供更好地代表房屋面临的危险的利率。它们还提供整合房主保险政策的能力。它们还为有需要的消费者提供负担得起的保险，从而在市场上创造竞争。将私人保险覆盖率从目前的10%提高，也意味着NFIP债务的减少和向美国财政部的必要借款。第1313条下的2017年第2874号决议包括促进私人洪水保险覆盖面的条款，以加强NFIP;此类条款包括风险分担试点计划，即“由你自己的公司为至少5万美元的财产投保，NFIP发放的保单超过了该保险限额。”“这些变化将使NFIP成为一个更有效的项目，更好地服务于洪水地区的房主。民间资本将带来创新的产品、进步的做法，同时减轻NFIP的全部风险负担和增加费用。最终给美国人更多的选择来保护他们的投资。

Partial Privatization has some downsides alike. For example, unlike the NFIP, private insurers would not be available to all floodplain residents and could be protection could be altered or vary depending on the state or region you reside in. According to the Congressional Research Service, or CRS, increased private insurance could also have an impact on the provided subsidies from NFIP to some consumers. According to FEMA, an estimated 20% of insured properties pay subsidized premiums which would be at risk with the inclusion of private insurers. The spread of risk is also hindered by adverse selection because owners who have a lower risk of floods are deciding to pass up coverage. Partial Privatization could also increase the issue with adverse selection through “cherry-picking” homes which are less flood-prone and leaving the high-risk areas for the NFIP. This could continue to place all the financial burden on the program even when prices reflect actual risk.[12] The reason the National Flood Insurance Program was put into place was that private sectors did not want to commit to the possibility of significant loss by offering coverage in high-risk flood zones. Although it is not 1968 anymore and Flood risk is better quantifies, the possibility of history repeating itself is still possible which keep the public reluctant to jump on board with this change.

Full Privatization全面私有化

The National Flood Insurance Program Has some severe flaws and considering the amount of debt that the program is in, it is undeniable that something must be done. If the program fails, the $20 to 25 billion dollars in debt will be placed on the taxpayers back which is a driving concern in trying to find a solution. Some argue that the answer is the total elimination of the program or limiting it to serve only as a residual market mechanism for homeowners who are not insurable by private companies. Full privatization would require assistance from Congress in order to compete with the NFIP. The 2011 study from The Property Casualty Insurers Association of America concluded that the NFIP’s rates unable to be competed with because they are half of the standard. This gap in the price of rates would mean that even partial privatization would face hardship because private companies would risk losing money.[13]

国家洪水保险计划存在着一些严重的缺陷，考虑到该计划所涉及的债务数额，不可否认的是必须采取一些措施。如果该计划失败，这200亿到250亿美元的债务将由纳税人承担，这是试图找到解决方案的一个紧迫问题。一些人认为，解决办法是彻底取消该计划，或者限制它仅作为一种剩余的市场机制，为那些不能被私人公司投保的房主服务。全面私有化需要国会的帮助，以便与NFIP竞争。美国财产保险协会(The Property Casualty Insurers) 2011年的研究得出的结论是，NFIP的费率无法与之竞争，因为它是标准的一半。这一价差意味着，即使是部分私有化也将面临困难，因为私营公司将面临亏损的风险

 According to Brannon and Black’s “Reforming the National Flood Insurance Program: Toward Private Flood Insurance,” evidence suggest that a private market is superior to a government-run flood insurance program. Some of the advantages of having a nearly inversed scheme include the introduction to various options on how to protect their home. The National Flood Insurance Program had a lack of choice off-putting some consumers because of the vast market. Full privatization remedies the issue. As the risk pool broadens, private insurers will be able to tailor policies for high-risk areas and ultimately compete with NFIP.  Privatization can also spread awareness of how essential flood insurance is to a household financial planning and compelling homeowners. This can lead to overcoming adverse section through the acceptance of flood insurance as necessary. Full Privatization can also help simplify insurance by bundling policies. Then possibly in the future homeowner insurance will be able to include protection from different perils from flood to fire, further normalizing the inclusion of flood insurance. There could also be shorter waiting periods considering the NFIP has a 30-day window, and private insurers range from 0-15 days.

As Mentioned before, many factors made it uneconomic for the private insurance industry alone to make flood insurance available. It is challenging to privatize the entire market because the National Flood Insurance Program includes all homes and due to the amount of risk, some homes are high risk or flood too often to be considered insurable. This creates a need for the NFIP to stay in the market as a last resort. Other disadvantage includes the possible dramatic increase in policy prices. Mitigation would be funded by private markets while enforcing land use and practices.[14] This could result in required inspections for coverage which could be seen as an inconvenience and costly if a home is regarded as high risk. Moving towards full privatization could also contribute to the loss of trust because the sense of security of being backed by the federal government is no longer present.

如前所述，许多因素使得私人保险行业单独提供洪水保险是不经济的。将整个市场私有化是一个挑战，因为国家洪水保险计划包括所有的住房，由于风险的大小，一些住房是高风险的或洪水太经常被认为是可保险的。这就需要NFIP作为最后的手段留在市场上。其他不利因素包括政策价格可能大幅上涨。缓解措施将由私人市场提供资金，同时加强土地使用和实践。[14]这可能导致需要检查保险范围，这可能被认为是不方便和昂贵的，如果一个家庭被认为是高风险。走向全面私有化也可能导致信任的丧失，因为联邦政府支持的安全感已不复存在。

Conclusion结论

To summarize, every home in the United States lives in a flood zone, but the levels of risk vary from low to high-risk areas. This leaves homeowners susceptible to huge repair cost and substantial loss. Contrary to the misconception that homeowner’s polity includes flood insurance, the National Flood Insurance Program protects policyholders from the damages caused to their home and its contents. Structuring the roles of Private and Public sectors in managing flood risks is a challenging issue. The three schemes of structuring flood risk all had a positive and negative attribute.

总而言之，美国的每一个家庭都生活在洪水区，但风险水平从低到高风险地区各不相同。这使得房主容易遭受巨大的维修成本和重大损失。与房屋所有者的政策包括洪水保险的误解相反，国家洪水保险计划保护投保人免受对其房屋及其内容造成的损害。构建私人和公共部门在管理洪水风险方面的角色是一个具有挑战性的问题。构建洪水风险的三种方案都具有积极和消极的属性。

For the status quo, the NFIP would continue as it is, it enables homeowners in both low and high-risk areas alike to purchases flood insurance and payouts are not dependent on federal disaster declarations and do not need to be repaid. Some notable of the disadvantages, however, where moral hazard, regressive subsidies, and seemingly out of control debt, among other problems. Consideration for partial privatization brought advantages like flexible flood policies, integration with homeowner’s policy, innovative products, progressive practices, all while alleviating the burden of the National Flood Insurance Policy. Partial privatization could, however, eliminate subsidized premiums and increase the risk of adverse selection. Full Privatization also held a substantial list of benefits of which included the various options on how homeowners protect their homes, which results in the spread of awareness and minimizing adverse selections effects on policy owners, while also allowing for the convenience of the consumers bundling with other homeowner policies. The disadvantages of full privatization included the complications with providing all homes with coverage and staying actuarially sound and economically efficient, while also losing trust from removing the security of the Federal government’s backing.

I believe that the best option is to pursue a partially privatized market. The reason for my conclusion is because I do not think it is economically sound to continue the status quo and fall further into a black tunnel of debt. Hurricanes Katrina and Sandy cause NFIP over 20 billion dollars. While as of July 24th, 2018, Hurricane Harvey’s payments where at an estimated 8.8 billion.[15] Although this is a much more complicated issue, pooling and growing the number of policyholders is an essential requirement. Partial Privatization will give enough variety in policies to appeal to a wide market. It can also provide encouragement for more innovative and progressive calculations of flood risk. This would also leave the Federal Government to guide, assist, setting standards and provide incentives simply. Partial Privatization will also encourage homeowners to make good decisions about the location of their home and taking preventative methods to protect themselves. As our ability to assess and quality risk more accurately increases, we get closer to the ability to tackle this challenge and find a solution that is beneficial to both the insurer and the homeowners. Of course, this all depends on the market’s willingness and capability to comply, and a truly workable solution cannot be defined.

我认为最好的选择是追求一个部分私有化的市场。我得出这个结论的原因是，我认为继续维持现状、进一步陷入债务的黑暗隧道，在经济上是不合理的。卡特里娜和桑迪飓风导致NFIP超过200亿美元。而截至2018年7月24日，飓风“哈维”的支付金额估计为88亿美元尽管这是一个复杂得多的问题，汇集和增加投保人的数量是一个基本的要求。部分私有化将使政策具有足够的多样性，以吸引更广泛的市场。它还可以鼓励更创新和渐进的洪水风险计算。这也将使联邦政府只负责指导、协助、制定标准和提供奖励。部分私有化还将鼓励房主对房屋的位置做出正确的决定，并采取预防措施保护自己。随着我们更准确地评估和质量风险的能力的提高，我们越来越有能力应对这一挑战，并找到一个对保险公司和房主都有利的解决方案。当然，这一切都取决于市场的意愿和遵从的能力，而一个真正可行的解决方案是无法定义的。

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