金融Essay作業代寫范文：Roles of the Private and Public Sectors in Flood Risk Management

本文是金融專業的Essay范例，題目是“Roles of the Private and Public Sectors in Flood Risk Management（私營和公共部門在洪水風險管理中的作用）”，洪水是美國最常見的自然災害。它們也會導致巨大的損害和損失。實際上，每個人都生活在洪泛區，但風險水平從低到高風險不等。這種損失暴露使得全國各地的房主都容易遭受巨額的維修成本和重大損失。

Introduction介紹

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.

在美國，有超過1300萬的家庭位于洪水高危區，在30年的抵押貸款期限內，有26%的幾率發生洪水。這比在同一時間內發生火災的風險高出10%，但大多數房主甚至不會考慮住在沒有保險的房子里，保險包括由重大火災造成的損失。

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.

洪水保險不包括在普通房主的保單中，而是由國家洪水保險計劃(NFIP)承保，該計劃由聯邦應急管理局(FEMA)監管，自1968年以來實際上一直是唯一的提供者。開發它的原因是為那些被認為風險太高的房主提供洪水保險。私人保險公司停止了對這些地區的承保，因為這些地區有很高的災難性風險，會導致巨大的損失。NFIP為這些財產提供了保護和安全感。據黛安·p·角與聯邦應急管理局合作,業主需要購買洪水保險,如果他們的財產被標識為一個特殊的洪水災害地區,或SFHA相當于每年1%或更高的洪水風險,就是參與NFIP在一個社區。然而，聯邦應急管理局也報告說，中低風險地區占全國NFIP申請的20%以上。他們甚至得到了三分之一的洪水相關援助。在低風險和中等風險地區，洪水的風險降低了，但沒有消除。1968年，洪水被認為是不可保險的風險，NFIP為房主提供了防范洪水損失的可能性。它們的主要三個組成部分包括提供洪水保險、改善泛濫平原管理和繪制洪水危險區地圖NFIP還通過更嚴格的建筑規范和標準，為加強防洪作出了貢獻。

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現狀

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法規中，國會同意“一個洪水保險計劃可以通過提供適當的保護來防范洪水損失的危險，并通過盡量減少財產遭受洪水損失的風險來鼓勵合理的土地利用，從而促進公眾利益?！薄癧4]在實施《全國洪水保險法》時，人們認為，許多因素使得私營保險行業在為所有需要保護的人提供洪水保險的同時仍保持合理的條款和條件是不經濟的。這是現狀，今天仍然如此。只有不到10%的洪水保險由私人保險公司承保。

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.

盡管與NFIP相比，私人保險公司承擔的洪水風險相對較小，但他們仍然參與了該計劃。私人保險公司通過銷售保單和理賠服務來管理NFIP。最近，由于更先進的分析技術的發展，用于更好地預測風險，越來越多的私營保險公司表示有興趣與NFIP合作，以解決洪水風險的管理和融資問題。這可能會給NFIP帶來一些好處。這些優勢包括更靈活的洪水政策，因為它們可以更準確地識別和跟蹤風險，并提供更好地代表房屋面臨的危險的利率。它們還提供整合房主保險政策的能力。它們還為有需要的消費者提供負擔得起的保險，從而在市場上創造競爭。將私人保險覆蓋率從目前的10%提高，也意味著NFIP債務的減少和向美國財政部的必要借款。第1313條下的2017年第2874號決議包括促進私人洪水保險覆蓋面的條款，以加強NFIP;此類條款包括風險分擔試點計劃，即“由你自己的公司為至少5萬美元的財產投保，NFIP發放的保單超過了該保險限額。”“這些變化將使NFIP成為一個更有效的項目，更好地服務于洪水地區的房主。民間資本將帶來創新的產品、進步的做法，同時減輕NFIP的全部風險負擔和增加費用。最終給美國人更多的選擇來保護他們的投資。

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]

國家洪水保險計劃存在著一些嚴重的缺陷，考慮到該計劃所涉及的債務數額，不可否認的是必須采取一些措施。如果該計劃失敗，這200億到250億美元的債務將由納稅人承擔，這是試圖找到解決方案的一個緊迫問題。一些人認為，解決辦法是徹底取消該計劃，或者限制它僅作為一種剩余的市場機制，為那些不能被私人公司投保的房主服務。全面私有化需要國會的幫助，以便與NFIP競爭。美國財產保險協會(The Property Casualty Insurers) 2011年的研究得出的結論是，NFIP的費率無法與之競爭，因為它是標準的一半。這一價差意味著，即使是部分私有化也將面臨困難，因為私營公司將面臨虧損的風險

 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，許多因素使得私人保險行業單獨提供洪水保險是不經濟的。將整個市場私有化是一個挑戰，因為國家洪水保險計劃包括所有的住房，由于風險的大小，一些住房是高風險的或洪水太經常被認為是可保險的。這就需要NFIP作為最后的手段留在市場上。其他不利因素包括政策價格可能大幅上漲。緩解措施將由私人市場提供資金，同時加強土地使用和實踐。[14]這可能導致需要檢查保險范圍，這可能被認為是不方便和昂貴的，如果一個家庭被認為是高風險。走向全面私有化也可能導致信任的喪失，因為聯邦政府支持的安全感已不復存在。

Conclusion結論

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.

總而言之，美國的每一個家庭都生活在洪水區，但風險水平從低到高風險地區各不相同。這使得房主容易遭受巨大的維修成本和重大損失。與房屋所有者的政策包括洪水保險的誤解相反，國家洪水保險計劃保護投保人免受對其房屋及其內容造成的損害。構建私人和公共部門在管理洪水風險方面的角色是一個具有挑戰性的問題。構建洪水風險的三種方案都具有積極和消極的屬性。

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.

我認為最好的選擇是追求一個部分私有化的市場。我得出這個結論的原因是，我認為繼續維持現狀、進一步陷入債務的黑暗隧道，在經濟上是不合理的?？ㄌ乩锬群蜕５巷Z風導致NFIP超過200億美元。而截至2018年7月24日，颶風“哈維”的支付金額估計為88億美元盡管這是一個復雜得多的問題，匯集和增加投保人的數量是一個基本的要求。部分私有化將使政策具有足夠的多樣性，以吸引更廣泛的市場。它還可以鼓勵更創新和漸進的洪水風險計算。這也將使聯邦政府只負責指導、協助、制定標準和提供獎勵。部分私有化還將鼓勵房主對房屋的位置做出正確的決定，并采取預防措施保護自己。隨著我們更準確地評估和質量風險的能力的提高，我們越來越有能力應對這一挑戰，并找到一個對保險公司和房主都有利的解決方案。當然，這一切都取決于市場的意愿和遵從的能力，而一個真正可行的解決方案是無法定義的。

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