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This paper provides an overview of the existing systems of natural hazard insurance in Europe, their structural characteristics and peculiarities. It also discusses the diffi culties of adaptation of these systems to climate change and the growing number of natural disasters. Using Germany, Austria and Switzerland as examples, the paper demonstrates that based on the status quo, the Swiss monopoly insurance system, which is embedded within a unique direct voting environment, is most able to reduce micro-and macroeconomic disruptions resulting from natural hazards. 'Change in diversity' is seen to offer the best chance to arrive at insurance systems that are prepared for climate change while being adapted to local particularities. Efforts to harmonize national and regional systems as well as top-down EU initiatives are argued to be inadequate.

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may March 4, 2009Abstract This paper discusses the impact of foreign aid on the recipient country's preparedness against natural disasters. The theoretical model shows that foreign aid can have two opposing effects on a country's level of mitigating activities. In order to test the theoretical propositions we analyse the effect of foreign aid dependence on ex-ante riskmanagement activity proxied by the death toll from major storms, floods and earthquakes occurring worldwide between 1980 and 2002. We find evidence that the crowding-out effect of foreign aid outweighs the preventive effect in the case of storms, while there is mixed evidence in the case of floods and earthquakes.