Incorporating flood/catastrophe models into pricing and underwriting
Research report proposes new methodology to assist Canadian actuaries
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Water damage claims and climate-related perils have recently emerged as the largest claims costs facing property insurers in Canada. Canadian insurance companies have responded with the development and introduction of flood endorsements for property protection to the market.
Published in July 2018, this research report is prepared to assist Canadian actuaries in developing recommendations for pricing methodologies and underwriting approaches that incorporate the use of catastrophe model results. It provides a comprehensive evaluation of different methodologies for incorporating catastrophe modeling into ratemaking and underwriting as well as providing a proof of concept illustration of one potential solution for the industry.
Sponsored by the Canadian Institute of Actuaries, the Casualty Actuarial Society and the Society of Actuaries, the research team included Jim Christie and Stanley Caravaggio of RSM Canada and George Davis, Stacey Gotham and Alan Frith from AIR Worldwide.Download the research report here