Estimation of insurance premiums for coverage against natural disaster risk: an application of Bayesian Inference
This study applies Bayesian Inference to estimate flood risk for 53 dyke ring areas in the Netherlands, and focuses particularly on the data scarcity and extreme behaviour of catastrophe risk. The probability density curves of flood damage are estimated through Monte Carlo simulations. Based on thes...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Copernicus Publications
2013-03-01
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| Series: | Natural Hazards and Earth System Sciences |
| Online Access: | http://www.nat-hazards-earth-syst-sci.net/13/737/2013/nhess-13-737-2013.pdf |
| _version_ | 1819160449362427904 |
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| author | Y. Paudel W. J. W. Botzen J. C. J. H. Aerts |
| author_facet | Y. Paudel W. J. W. Botzen J. C. J. H. Aerts |
| author_sort | Y. Paudel |
| collection | DOAJ |
| description | This study applies Bayesian Inference to estimate flood risk for 53 dyke ring areas in the Netherlands, and focuses particularly on the data scarcity and extreme behaviour of catastrophe risk. The probability density curves of flood damage are estimated through Monte Carlo simulations. Based on these results, flood insurance premiums are estimated using two different practical methods that each account in different ways for an insurer's risk aversion and the dispersion rate of loss data. This study is of practical relevance because insurers have been considering the introduction of flood insurance in the Netherlands, which is currently not generally available. |
| first_indexed | 2024-12-22T16:56:37Z |
| format | Article |
| id | doaj.art-6799f4dfdacb4d55b6ae3fc4b1f42cdd |
| institution | Directory Open Access Journal |
| issn | 1561-8633 1684-9981 |
| language | English |
| last_indexed | 2024-12-22T16:56:37Z |
| publishDate | 2013-03-01 |
| publisher | Copernicus Publications |
| record_format | Article |
| series | Natural Hazards and Earth System Sciences |
| spelling | doaj.art-6799f4dfdacb4d55b6ae3fc4b1f42cdd2022-12-21T18:19:26ZengCopernicus PublicationsNatural Hazards and Earth System Sciences1561-86331684-99812013-03-0113373775410.5194/nhess-13-737-2013Estimation of insurance premiums for coverage against natural disaster risk: an application of Bayesian InferenceY. PaudelW. J. W. BotzenJ. C. J. H. AertsThis study applies Bayesian Inference to estimate flood risk for 53 dyke ring areas in the Netherlands, and focuses particularly on the data scarcity and extreme behaviour of catastrophe risk. The probability density curves of flood damage are estimated through Monte Carlo simulations. Based on these results, flood insurance premiums are estimated using two different practical methods that each account in different ways for an insurer's risk aversion and the dispersion rate of loss data. This study is of practical relevance because insurers have been considering the introduction of flood insurance in the Netherlands, which is currently not generally available.http://www.nat-hazards-earth-syst-sci.net/13/737/2013/nhess-13-737-2013.pdf |
| spellingShingle | Y. Paudel W. J. W. Botzen J. C. J. H. Aerts Estimation of insurance premiums for coverage against natural disaster risk: an application of Bayesian Inference Natural Hazards and Earth System Sciences |
| title | Estimation of insurance premiums for coverage against natural disaster risk: an application of Bayesian Inference |
| title_full | Estimation of insurance premiums for coverage against natural disaster risk: an application of Bayesian Inference |
| title_fullStr | Estimation of insurance premiums for coverage against natural disaster risk: an application of Bayesian Inference |
| title_full_unstemmed | Estimation of insurance premiums for coverage against natural disaster risk: an application of Bayesian Inference |
| title_short | Estimation of insurance premiums for coverage against natural disaster risk: an application of Bayesian Inference |
| title_sort | estimation of insurance premiums for coverage against natural disaster risk an application of bayesian inference |
| url | http://www.nat-hazards-earth-syst-sci.net/13/737/2013/nhess-13-737-2013.pdf |
| work_keys_str_mv | AT ypaudel estimationofinsurancepremiumsforcoverageagainstnaturaldisasterriskanapplicationofbayesianinference AT wjwbotzen estimationofinsurancepremiumsforcoverageagainstnaturaldisasterriskanapplicationofbayesianinference AT jcjhaerts estimationofinsurancepremiumsforcoverageagainstnaturaldisasterriskanapplicationofbayesianinference |