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Flashcards in Grossi - Reinsurance Deck (3):
1

uses of EP curve for both insurer and reinsurer

- 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

why is a probabilistic approach to cat loss analysis the best way?

- 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

What are the two types of uncertainty?
Give two example each

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