Insurance Project.

• Position: Bureau News - Summary of group meeting from January 31 and Februrary 1

The NBER's Insurance Project, directed by Kenneth A. Froot, NBER and MIT, and Howard Kunreuther, NBER and University of Pennsylvania, met in Cambridge on January 31 and February 1. The following papers were discussed:

J. David Cummins, University of Pennsylvania, and Christopher M. Lewis, Fitch Risk Management, "Catastrophic Events, Parameter Uncertainty and the Breakdown of Implicit Long-Term Contracting in the Insurance Market: The Case of Terrorism Insurance"

Discussant: Joan Lamm-Tenant, General Cologne Re Capital Consultants

Gordon Woo, Risk Management Solutions, "Insuring Against AlQaeda"

Discussant: John Major, Guy Carpenter & Company, Inc.

Thomas Russell, Santa Clara University, "The Costs and Benefits of the Terrorism Risk Insurance Act: A First Look" Discussant: Paul Freeman, University of Denver

Darius Lakdawalla, NBER and RAND, and George Zanjani, Federal Reserve Bank of New York, "Insurance, Self-Protection, and the Economics of Terrorism"

Discussant: Howard Kunreuther

Alma Cohen, Harvard University, "Asymmetric Information and

Learning: Evidence from the Automobile Insurance Market"

Discussant: Gordon Stewart, Insurance Information Institute

Bradley Herring, Emory University, and Mark Pauly, University of Pennsylvania, "Incentive-Compatible Guaranteed Renewable Health Insurance Premiums"

Discussant: Thomas McGuire, Harvard University

Thomas Davidoff, University of California, Berkeley; Jeffrey Brown, NBER and University of Illinois at Urbana-Champaign; and Peter Diamond, NBER and MIT, "Annuities and Individual Welfare"

Discussant: Amy Finkelstein, NBER

Olivier Mahul, INRA, "Efficient Risk Sharing within a Catastrophe Insurance Pool"

Discussant: Kenneth A. Froot

Alex Boulatov and Dwight Jaffee, University of California, Berkeley, "The Response of Catastrophe Insurance Markets to Extreme Events: A Real Option Approach" Discussant: Kent Smetters, NBER and University of Pennsylvania

Neil Doherty and Paul Kleindorfer, University of Pennsylvania, "Market, Cotnract Designs, and Mutualization: Insuring Catastrophic Losses"

Discussant: David Durbin, Swiss Re

Geoffrey Heal, Columbia University, and Howard Kunreuther, "You Can Only Die Once: Managing Discrete. Interdependent Risks"

Discussant: Nathaniel Keohane, Yale University

Cummins and Lewis examine the reaction of the stock prices of U.S. property-casualty insurers to the World Trade Center (WTC) terrorist attack of September 11, 2001. Theories of insurance market equilibrium and theories of long-term contracting predict that large loss events that deplete capital and increase uncertainty will affect weakly capitalized...