Epidemic risk and insurance coverage. (4th April 2017)

• Record Type: Journal Article
• Authors: Lefèvre, Claude; Picard, Philippe; Simon, Matthieu
• Is Part Of: Journal of applied probability. Volume 54:Number 1(2017)
• Page Start: 286
• Page End: 303
• Publication Date: 2017-04-04
• Subjects: SIR epidemic, -- removal-dependent rate, -- epidemic size, -- infectivity time, -- susceptibility time, -- insurance premium, -- martingale; Primary 60J28, -- ; 91B30, -- ; 92D30; 519.2
• DOI: 10.1017/jpr.2016.100
• Languages: English
• ISSNs: 0021-9002

Abstract

Abstract: In this paper we aim to apply simple actuarial methods to build an insurance plan protecting against an epidemic risk in a population. The studied model is an extended SIR epidemic in which the removal and infection rates may depend on the number of registered removals. The costs due to the epidemic are measured through the expected epidemic size and infectivity time. The premiums received during the epidemic outbreak are measured through the expected susceptibility time. Using martingale arguments, a method by recursion is developed to calculate the cost components and the corresponding premium levels in this extended epidemic model. Some numerical examples illustrate the effect of removals and the premium calculation in an insurance plan.