Flood Catastrophe Model for Designing Optimal Flood Insurance Program: Estimating Location-Specific Premiums in the Netherlands

12333 12 44970 2 115422 document 44970 Flood catastrophe model.pdf application/pdf b80e8b2072bbac5793e92e006abc5dcd MD5 1087744 2016-03-29 12:50:09 https://pure.iiasa.ac.at/id/eprint/12333/1/Flood%20catastrophe%20model.pdf 12333 1 1 application/pdf text en public cc_by

Flood catastrophe model.pdf

accepted 44971 2 115425 document 44971 lightbox.jpg image/png 7bcefe572fe1cf74559a2cc82bec7753 MD5 12233 2016-03-29 12:50:21 https://pure.iiasa.ac.at/id/eprint/12333/2/lightbox.jpg 12333 2 2 image/png other Thumbnails conversion from text to thumbnail_lightbox en public

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http://eprints.org/relation/isVersionOf https://pure.iiasa.ac.at/id/document/44970 http://eprints.org/relation/isVolatileVersionOf https://pure.iiasa.ac.at/id/document/44970 http://eprints.org/relation/isIndexCodesVersionOf https://pure.iiasa.ac.at/id/document/44970 archive 2 disk0/00/01/23/33 2016-03-29 12:33:53 2022-02-02 14:11:26 2016-03-29 12:33:53 article show Ermolieva T. 7638 Filatova T. Ermoliev Y. 1445 Obersteiner M. 7255 0000-0001-6981-2769 de Bruijn K. M. Jeuken A. Flood Catastrophe Model for Designing Optimal Flood Insurance Program: Estimating Location-Specific Premiums in the Netherlands pub prog_esm Flood risk; loss-sharing programs; quantile-related stochastic optimization; spatial catastrophe model As flood risks grow worldwide, a well-designed insurance program engaging various stakeholders becomes a vital instrument in flood risk management. The main challenge concerns the applicability of standard approaches for calculating insurance premiums of rare catastrophic losses. This article focuses on the design of a flood-loss-sharing program involving private insurance based on location-specific exposures. The analysis is guided by a developed integrated catastrophe risk management (ICRM) model consisting of a GIS-based flood model and a stochastic optimization procedure with respect to location-specific risk exposures. To achieve the stability and robustness of the program towards floods with various recurrences, the ICRM uses stochastic optimization procedure, which relies on quantile-related risk functions of a systemic insolvency involving overpayments and underpayments of the stakeholders. Two alternative ways of calculating insurance premiums are compared: the robust derived with the ICRM and the traditional average annual loss approach. The applicability of the proposed model is illustrated in a case study of a Rotterdam area outside the main flood protection system in the Netherlands. Our numerical experiments demonstrate essential advantages of the robust premiums, namely, that they: (1) guarantee the program's solvency under all relevant flood scenarios rather than one average event; (2) establish a tradeoff between the security of the program and the welfare of locations; and (3) decrease the need for other risk transfer and risk reduction measures. 2016 Wiley-Blackwell 10.1111/risa.12589 83 338 219 public Risk Analysis 1-17 TRUE 1539-6924 Economics of climate change adaptation in Europe (ECONADAPT, FP7 603906) FALSE yes info:eu-repo/grantAgreement/EC/FP7/603906/EU/Economics of climate change adaptation in Europe/ECONADAPT info:eu-repo/semantics/article info:eu-repo/semantics/openAccess