Seismic Risk Management of Insurance Portfolio Using Catastrophe Bonds. (11th September 2014)

• Record Type: Journal Article
• Authors: Goda, Katsuichiro; Iervolino, Iunio; Ellingwood, Bruce R.
• Is Part Of: Computer-aided civil and infrastructure engineering. Volume 30:Number 7(2015:Jul.)
• Page Start: 570
• Page End: 582
• Publication Date: 2014-09-11
• Subjects: Civil engineering -- Data processing -- Periodicals; Computer-aided engineering -- Periodicals; 624.0285
• DOI: 10.1111/mice.12093
• Languages: English
• ISSNs: 1093-9687

Abstract

<abstract abstract-type="main"> <title>Abstract</title> <p>Parametric earthquake catastrophe bonds are emerging risk transfer instruments for governments and insurers. This study extends a current station‐intensity‐based trigger method for binary payments, which utilizes direct observation of ground motions at recording stations, by promoting a more flexible multiple‐discrete payment structure. A calibration procedure of the bond trigger mechanism for the new approach is demonstrated by focusing upon a realistic portfolio of conventional wood‐frame houses in Vancouver, Canada. Numerical results indicate that the new method with a multiple‐discrete payment structure decreases the magnitude of trigger errors significantly in terms of seismic loss, and facilitates the flexible adoption of various payment structures for catastrophe bonds. Furthermore, a synergy between the calibration of parametric catastrophe bonds and the current performance‐based earthquake engineering framework is highlighted.</p> </abstract>