Dealing with Adversity through Diversity

This article reviews different types of disasters, namely natural, political and health, and states that health risks expose individuals and households to more catastrophic consequences than other disasters.

Risk management deals with disasters in terms of prevention and compensation. The paper sates that:

• Health insurance, more than other types of insurance, includes ex-ante prevention as well as ex-post compensation;
• Insurance industry can enlarge its ability to deal with more types of risks with more severe damage levels by ceding risks to reinsurance;
• Reinsurance facility, however, has not been created for health insurance.

The paper states that although health risks represent greater adversity for poor people than other disasters, it has not been broached at the national level in many low-income countries. There is an urgent need to provide social reinsurance to underwrite health risks of large segments of the population.