Eine Plattform für die Wissenschaft: Bauingenieurwesen, Architektur und Urbanistik
Eine Plattform für die Wissenschaft: Bauingenieurwesen, Architektur und Urbanistik
Financial Model for Insuring against Catastrophic Storm Risks
Risks and uncertainties represent an integral part of the construction process that negatively affects executed projects, contracting parties, and the industry as a whole. In fact, natural hazardous events become extremely important at construction developments that allow low or zero tolerance levels. Concerns regarding catastrophic losses have limited the commercialization of certain projects and activities. This paper proposes a financial model for insuring against catastrophic storm risks that affect construction projects through a cost-benefit analysis. The challenge with modeling such severe conditions is that they are so rare that it might take thousands of years of experimental data to ensure that all possible events have been properly measured and captured. Under this study, the historic data in relation to storm events in Mississippi between 5/31/2006 and 5/31/2008 was analyzed using Chandler et al. (2001) technique to estimate loss parameters. This dataset was then bootstrapped using Iman and Conover technique to impose correlation and generate simulated dataset of 5,000 points. Finally, the bootstrapped data was modeled using a Monte Carlo simulation that is based on option theory to calculate the fair-valued premium for an interrelated insurance policy. This insurance product would: (1) fund any destructive effect in connection with construction projects; (2) allow comparing catastrophic risks against benefits by putting a dollar value to such risks; and (3) solve the non linearity problem between wind speed and associated losses. It is the author's hope that the developed model could be extended to form a nationwide insurance policy against catastrophic storm risk. Furthermore, the same principles exploited under the model beforehand could be slightly modified in order to be applied on other extreme weather events such as hurricanes and tornadoes.
Financial Model for Insuring against Catastrophic Storm Risks
Risks and uncertainties represent an integral part of the construction process that negatively affects executed projects, contracting parties, and the industry as a whole. In fact, natural hazardous events become extremely important at construction developments that allow low or zero tolerance levels. Concerns regarding catastrophic losses have limited the commercialization of certain projects and activities. This paper proposes a financial model for insuring against catastrophic storm risks that affect construction projects through a cost-benefit analysis. The challenge with modeling such severe conditions is that they are so rare that it might take thousands of years of experimental data to ensure that all possible events have been properly measured and captured. Under this study, the historic data in relation to storm events in Mississippi between 5/31/2006 and 5/31/2008 was analyzed using Chandler et al. (2001) technique to estimate loss parameters. This dataset was then bootstrapped using Iman and Conover technique to impose correlation and generate simulated dataset of 5,000 points. Finally, the bootstrapped data was modeled using a Monte Carlo simulation that is based on option theory to calculate the fair-valued premium for an interrelated insurance policy. This insurance product would: (1) fund any destructive effect in connection with construction projects; (2) allow comparing catastrophic risks against benefits by putting a dollar value to such risks; and (3) solve the non linearity problem between wind speed and associated losses. It is the author's hope that the developed model could be extended to form a nationwide insurance policy against catastrophic storm risk. Furthermore, the same principles exploited under the model beforehand could be slightly modified in order to be applied on other extreme weather events such as hurricanes and tornadoes.
Financial Model for Insuring against Catastrophic Storm Risks
El-adaway, Islam H. (Autor:in)
Construction Research Congress 2009 ; 2009 ; Seattle, Washington, United States
Building a Sustainable Future ; 675-684
01.04.2009
Aufsatz (Konferenz)
Elektronische Ressource
Englisch
Financial Model for Insuring against Catastrophic Storm Risks
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