Explaining the failure to insure catastrophic risks

It has often been observed that homeowners fail to purchase disaster insurance. Explanations have ranged from behavioural biases to information search costs. We show that the decision to forego disaster insurance may be quite rational. Solvency-constrained insurers are required to have access to enough capital to cover a particular percentile of their aggregate loss distribution. When insuring risks with loss distributions characterised by fat tails, micro-correlations or tail dependence, insurers need to charge a price that is many times the expected loss in order to meet their solvency constraint. Homeowners, facing a budget constraint and a constraint that their utility with insurance exceeds that without it, may find the required loadings too high to make insurance purchase an optimal decision. © 2012 The International Association for the Study of Insurance Economics

Flammer syndrome and autoimmune inflammatory conditions of the central nervous system: multifactorial interrelations

Multiple sclerosis (MS) is the most frequent autoimmune inflammatory and neurodegenerative central nervous system disorder that affects mostly young females and manifests with transient or irreversible neurologic dysfunction caused by demyelination and subsequent axonal transection and neuronal demise. Besides genetic susceptibility, environmental risk factors play a causative role. Although the exact immunopathogenesis has not been fully clarified, the condition is – albeit incurable – amenable to treatment with immunomodulatory drugs. Structural and functional changes in the brain and retinal vasculature in MS causing cerebral hypoperfusion may be a potential pathophysiological link with Flammer Syndrome (FS). However, only one study thus far has systematically investigated the co-occurrence of MS and FS and has shown that multiple symptoms and signs considered as characteristic of FS occur more often in MS patients than in unselected controls. While there is some overlap in symptomatology and clinical findings between the 2 conditions, this does not imply causality, but this preliminary observation should trigger more research on pathophysiological commonalities and clinical course of patients who are eventually diagnosed with both disorders. Susac Syndrome (SuS) is a very rare presumably immune mediated central nervous system disease that affects microvessels in the brain, the retina and the inner ear. This may cause secondary vascular dysregulation and thus signs and symptoms of FS, while it was also proposed that FS may predispose to SuS. However, as in MS assumptions on a potential association of SuS with FS are still poorly supported by rigorous data