Abstract This paper discusses the failure of catastrophic insurance market affected by charity hazard. Charity hazard is a premium-free insurance provided by others for individuals, which leads individuals tendency not to insure or take any other mitigation measures as a result of reliance on excepted financial assistance from governmental relief or donations by NGO or friends. For depressing the impaction of charity hazard, governments need some reasonable institutional arrangements and alternations, for example, mandatory insurance, the redirection of governmental funds from post-catastrophe relief to pre-catastrophe subsidies for insurance premiums or other protective measures.
2013, Vol. 1 
