Paul Hudson, W.J. Wouter Botzen, Jeffrey Czajkowski, Heidi Kreibich 1 Department of Environmental Economics, Institute for Environmental Studies, VU University Amsterdam, the Netherlands. 2 Wharton Risk Management and Decision Processes Center, University of Pennsylvania, U.S. 3 GFZ German Research Centre for Geosciences, Potsdam, Germany. Abstract Adverse selection and moral hazard are commonl...

Large insurance losses happen infrequently, but they happen. In this paper we present the standard distribution models used in fire, wind–storm or flood insurance. We also present the classical Cramér-Lundberg model for the total claim amount and some more recent extensions. The classical insurance risk measure is the ruin probability and we give a full account of the ruin event in such models....

Theoretically, weather-index insurance is an effective risk reduction option for small-scale farmers in low income countries. Renewed policy and donor emphasis on bridging gender gaps in development also emphasizes the potential social safety net benefits that weather-index insurance could bring to women farmers who are disproportionately vulnerable to climate change risk and have low adaptive ...

A great deal of the present concern regarding future use of genetic tests by insurers stems from a lack of knowledge of the basic tenets of private, voluntary insurance. For this reason, I would like to examine briefly some of the fundamental principles of insurance before directly addressing issues associated with genetic testing. Insurance is intended to provide financial protection against u...

Most working-age Americans obtain health insurance coverage through the workplace. U.S. law requires employers that offer health plans to use a price common to all in the group, but the value of insurance to each risk-averse individual varies with their idiosyncratic health risk. Hence, linking employment and health insurance creates a wedge between the marginal cost and benefit of insurance. S...

Recent work in security has illustrated that solutions aimed at detection and elimination of security threats alone are unlikely to result in a robust cyberspace. As an orthogonal approach to mitigating security problems, some have pursued the use of cyber-insurance as a suitable risk management technique. Such an approach has the potential to jointly align the incentives of security vendors (e...

This paper examines recent experience with insurance and other risk-financing instruments in developing countries, informed by experience in developed countries, to provide insights on the effectiveness of insurance for reducing economic insecurity. Insurance and other risk financing strategies are viewed in the overall context of risk management, including the prevention of losses as well as f...

Fair pricing of embedded options in life insurance contracts is usually conducted by using risk-neutral valuation. This pricing framework assumes a perfect hedging strategy, which insurance companies can hardly pursue in practice. In this paper, we extend the risk-neutral valuation concept with a risk measurement approach. We accomplish this by first calibrating contract parameters that lead to...

The UPA (Underwriting Profitability Analysis) application embodies a new approach to mining Property & Casualty (P&C) insurance policy and claims data for the purpose of constructing predictive models for insurance risks. UPA utilizes the ProbE (Probabilistic Estimation) predictive modeling data mining kernel to discover risk characterization rules by analyzing large and noisy insurance data se...