Catastrophe Ratemaking Revisited (Use of Computer Models to Estimate Loss Costs;)

Recent developments in computer technology have significantly altered the way the insurance business functions. Easy access to large quantities of data has rendered some traditional ratemaking limitations obsolete. The emergence of catastrophe simulation using computer modeling has helped actuaries develop new methods for measuring catastrophe risk and providing for it in insurance rates. This paper addresses issues associated with these methods and provides actuaries, underwriters and regulators with an understanding of the features and benefits of computer modeling for catastrophe ratemaking. Biographies Michael A. Walters is a principal and consulting actuary with Tillinghast-Towers Perrin in Parsippany, New Jersey. A graduate of Fordham University, he has a master's degree in mathematics from the University of Notre Dame. He is a Fellow and past president of the Casualty Actuarial Society and a past vice president of the American Academy of Actuaries and past chairman of its Casualty Practice Council. He has authored two papers previously included in the CAS Syllabus of Examinations: " Homeowners Insurance Ratemaking " and " Risk Classification Standards. " The latter was awarded the 1981 CAS Dorweiler prize. Frayois Morin is a consulting actuary with Tillinghast-Towers Perrin in Hartford, Connecticut. Mr. Morin has a bachelor of science degree in actuarial science from Lava1 University in Quebec City. He is a Fellow of the Casualty Actuarial Society and a Member of the American Academy of Actuaries. Mr. Morin provides catastrophe modeling consulting services to the insurance industry and has contributed to the development of ToPCAT, Tillinghast's catastrophe model.