Abstract
One of the effects of climate change is a decrease in rainfall in the American Southwest including California. In the last year, there were the usual number of rainstorms but instead of dropping two to four inches of rain each, they dropped less than 1/4 inch. The brush lands are dry and frequent fires are forecast.
Underwriting and casualty actuarial managers must adopt a new algorithm to provide adequate forecasting of the effect of climate change on brush fire losses. Usually we use incurred loss data to determine our estimates of loss frequency and severity. This has been compared to driving a car by looking out the back window. If there are no fundamental changes that would affect loss frequency and severity, historical data will work quite well. If the climate is warming, then the assumption that the past is prologue may not hold.
Keywords: Climate Change
Volume
Winter, Vol. 1
Page
1-4
Year
2014
Categories
Financial and Statistical Methods
Extreme Event Modeling
Other Extreme Events
Publications
Casualty Actuarial Society E-Forum
