Catastrophe Hazard refers to circumstances where there is a significant deviation of the actual aggregate losses from the expected aggregate losses, such as a major natural disaster where whole units or blocks of businesses are threatened. These hazards are often uninsurable by commercial insurance companies due to the extremity of the risk involved or the prohibitive actuarial premiums.
Risk financing transfer involves paying an insurance premium to an insurance firm to cover certain risk hazards, thereby transferring the financial consequences of those risks.
