Catastrophe Ratemaking Revisited (Use of Computer Models to Estimate Loss Costs)

Recent developments in computer technology have significantly altered the way the insurance business functions. Easy access to large quantities of data has rendered some traditional ratemaking limitations obsolete. The emergence of catastrophe simulation using computer modeling has helped actuaries develop new methods for measuring catastrophe risk and providing for it in insurance rates. This paper addresses issues associated with these methods and provides actuaries, underwriters and regulators with an understanding of the features and benefits of computer modeling for catastrophe ratemaking. Reinsurance Research