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From Earthquake Geophysical Measures to Insurance Premium: A Generalised Method for the Evaluation of Seismic Risk, with Application to Italy’s Housing Stock

Author

Listed:
  • Cesari Riccardo

    (IVASS, Via del Quirinale 21, Rome 00187, Italy)

  • D’Aurizio Leandro

    (IVASS, Via del Quirinale 21, Rome 00187, Italy)

Abstract

Following the increasing necessity of quantitative measures for the impact of natural catastrophes, this paper proposes a new technique for a probabilistic assessment of seismic risk by using publicly available data on the earthquakes that have occurred in Italy. We implement an insurance-oriented methodology to produce a new map of the seismic risk and to evaluate, under various hypotheses, the costs of insuring all the Italian housing units against it. The model is compared with two main privately developed models, well known in the reinsurance industry, providing fairly similar results.

Suggested Citation

  • Cesari Riccardo & D’Aurizio Leandro, 2022. "From Earthquake Geophysical Measures to Insurance Premium: A Generalised Method for the Evaluation of Seismic Risk, with Application to Italy’s Housing Stock," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 16(2), pages 155-185, July.
    • Handle: RePEc:bpj:apjrin:v:16:y:2022:i:2:p:155-185:n:5
    DOI: 10.1515/apjri-2020-0034
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    More about this item

    Keywords

    earthquakes; seismic risk; exceedance loss; insurance pricing;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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