Catastrophe Pricing: Making Sense of the Alternatives

This paper examines different ways of pricing catastrophe (CAT)coverage for reinsurance treaties and large insurance accounts. While all the methods use CAT loss simulation mode l statistics, they use different statistics and different algorithms to arrive at indicated prices. This paper will provide the reader with the conceptual foundations and practical insights for understanding alternative approaches.

Keywords: Catastrophe Pricing, Risk Measure, Coherence, Capital Allocation