Grossi - Reinsurance Flashcards
1
Q
uses of EP curve for both insurer and reinsurer
A
- determine size and distribution of their portfolio’s potential losses
- determine the types and locations of building they would like to insure
- what coverage to offer, and what price to charge
- what proportion of their risk to be transferred
2
Q
why is a probabilistic approach to cat loss analysis the best way?
A
- relative infrequency of cat events results in scarcity of the historical loss data
- Statistical techniques that require vast amount of data are not appropriate for estimating cat loss
- historical loss can not be relied upon due to ever-changing aspect of properties
3
Q
What are the two types of uncertainty?
Give two example each
A
Aleatory:
- inherent randomness associated with natural hazard events
- can not be reduced by collection of additional data
- e.g. freq of a hazard occurrence
Epistemic:
- uncertainty due to lack of information or knowledge of the hazard
- can be reduce by collection of additional data
- e.g. insufficient historical earthquake data
- lack of available data to create GIS database
