Engineering models for catastrophe risk and their application to insurance |
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Authors: | Weimin Dong PhD |
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Institution: | Risk Management Solutions, Inc. USA |
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Abstract: | Internationally earthquake insurance, like all other insurance (fire, auto), adopted actuarial approach in the past, which
is, based on historical loss experience to determine insurance rate. Due to the fact that earthquake is a rare event with
severe consequence, irrational determination of premium rate and lack of understanding scale of potential loss led to many
insurance companies insolvent after Northridge earthquake in 1994.
Along with recent advances in earth science, computer science and engineering, computerized loss estimation methodologies
based on first principles have been developed to the point that losses from destructive earthquakes can be quantified with
reasonable accuracy using scientific modeling techniques.
This paper intends to introduce how engineering models can assist to quantify earthquake risk and how insurance industry can
use this information to manage their risk in the United States and abroad.
Supported partially by: Institute of Engineering Mechanics, CSB |
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Keywords: | risk insurance earthquake engineering model |
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