Parametric Insurance—A Possible and Necessary Solution to Insure the Earthquake Risk of Romania
The rapid growth over recent decades of the impact of natural disasters on economies, especially in vulnerable areas, urges stakeholders to promote innovative solutions involving risk transfers that account for the new risk exposures. These proposed solutions are designed to optimize and expedite th...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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MDPI AG
2022-03-01
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| Series: | Risks |
| Subjects: | |
| Online Access: | https://www.mdpi.com/2227-9091/10/3/59 |
| _version_ | 1797442601306030080 |
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| author | Nicoleta Radu Felicia Alexandru |
| author_facet | Nicoleta Radu Felicia Alexandru |
| author_sort | Nicoleta Radu |
| collection | DOAJ |
| description | The rapid growth over recent decades of the impact of natural disasters on economies, especially in vulnerable areas, urges stakeholders to promote innovative solutions involving risk transfers that account for the new risk exposures. These proposed solutions are designed to optimize and expedite the indemnification process, which can ultimately be beneficial for both policyholders and insurers alike. This article explores the possibility of supplementing the current Romanian dwelling insurance protection scheme with a parametric mechanism. To determine the triggering parameter of the insurance pay-out, the authors consider various hazard scenarios developed based on historical events. This paper focuses on Probable Maximum Loss (PML) determination computed for events with epicenters in the Vrancea (a region and a mountain in the Carpathians) seismic area. This area is the most exposed in Romania to earthquakes, and it includes the capital, Bucharest, which is the urban area with the highest population concentration and, consequently, the highest exposure to the discussed risks. |
| first_indexed | 2024-03-09T12:44:18Z |
| format | Article |
| id | doaj.art-de577609e6c54761a1b55367224ba99a |
| institution | Directory Open Access Journal |
| issn | 2227-9091 |
| language | English |
| last_indexed | 2024-03-09T12:44:18Z |
| publishDate | 2022-03-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Risks |
| spelling | doaj.art-de577609e6c54761a1b55367224ba99a2023-11-30T22:14:58ZengMDPI AGRisks2227-90912022-03-011035910.3390/risks10030059Parametric Insurance—A Possible and Necessary Solution to Insure the Earthquake Risk of RomaniaNicoleta Radu0Felicia Alexandru1Doctoral School of Finance, Faculty of Finance and Banking, Bucharest University of Economic Studies, 010374 Bucharest, RomaniaDepartment of Finance, Faculty of Finance and Banking, Bucharest University of Economic Studies, 010374 Bucharest, RomaniaThe rapid growth over recent decades of the impact of natural disasters on economies, especially in vulnerable areas, urges stakeholders to promote innovative solutions involving risk transfers that account for the new risk exposures. These proposed solutions are designed to optimize and expedite the indemnification process, which can ultimately be beneficial for both policyholders and insurers alike. This article explores the possibility of supplementing the current Romanian dwelling insurance protection scheme with a parametric mechanism. To determine the triggering parameter of the insurance pay-out, the authors consider various hazard scenarios developed based on historical events. This paper focuses on Probable Maximum Loss (PML) determination computed for events with epicenters in the Vrancea (a region and a mountain in the Carpathians) seismic area. This area is the most exposed in Romania to earthquakes, and it includes the capital, Bucharest, which is the urban area with the highest population concentration and, consequently, the highest exposure to the discussed risks.https://www.mdpi.com/2227-9091/10/3/59parametric insurancenatural disastersearthquakehome insurance |
| spellingShingle | Nicoleta Radu Felicia Alexandru Parametric Insurance—A Possible and Necessary Solution to Insure the Earthquake Risk of Romania Risks parametric insurance natural disasters earthquake home insurance |
| title | Parametric Insurance—A Possible and Necessary Solution to Insure the Earthquake Risk of Romania |
| title_full | Parametric Insurance—A Possible and Necessary Solution to Insure the Earthquake Risk of Romania |
| title_fullStr | Parametric Insurance—A Possible and Necessary Solution to Insure the Earthquake Risk of Romania |
| title_full_unstemmed | Parametric Insurance—A Possible and Necessary Solution to Insure the Earthquake Risk of Romania |
| title_short | Parametric Insurance—A Possible and Necessary Solution to Insure the Earthquake Risk of Romania |
| title_sort | parametric insurance a possible and necessary solution to insure the earthquake risk of romania |
| topic | parametric insurance natural disasters earthquake home insurance |
| url | https://www.mdpi.com/2227-9091/10/3/59 |
| work_keys_str_mv | AT nicoletaradu parametricinsuranceapossibleandnecessarysolutiontoinsuretheearthquakeriskofromania AT feliciaalexandru parametricinsuranceapossibleandnecessarysolutiontoinsuretheearthquakeriskofromania |