An Examination On Issuing Catastrophe Bonds In Taiwan

• Main Authors: Shu-Ming Lu, 呂淑銘
• Other Authors: Sung-Ching Lee
• Format: Others
• Language: zh-TW
• Published: 2005
• Online Access: http://ndltd.ncl.edu.tw/handle/fsnh2x

碩士 === 銘傳大學 === 經濟學系碩士班 === 93 === For developed countries, the domestic insurance market usually can provide sufficient funds for catastrophe reconstruction. While for developing countries having immature domestic insurance markets, they can only rely on international aids and contributions to overcome the difficulty of facing catastrophes. However, for large enough catastrophes, there is no single insurance market in the world which can have the ability to handle the problem alone. Therefore, the capital market would be the best place to search for aids, and the existence of the catastrophe bonds market accordingly. After the “921 earthquake” caused great damage on people’s life and welfare, the Ministry of Finance in Taiwan introduced the Taiwan Residential Earthquake Insurance Pool (TREIP) as the hedging mechanism. TREIP was established in July 2001 according to Article 138-1 of the Taiwan Insurance Act, has four tiers to generate a total of NT$50 billions in capacity. The main purpose of this thesis is to discuss the rationality of TREIP. Based on the characteristics of catastrophe bonds and the role of catastrophe bonds, it is believed that the current design behind the TREIP is very questionable, and certain adjustments should be undertaken in order to make it more sustainable in the long term. Furthermore, certain static analyses will also be performed in this study in order to make the job of issuing TREIP-related catastrophe bonds more reasonable and effective.