Insured Loss Inflation: How Natural Catastrophes Affect Reconstruction Costs
| Autor: | Marc Gürtler, Martin Hibbeln, David Döhrmann |
|---|---|
| Rok vydání: | 2016 |
| Předmět: |
Inflation
021110 strategic defence & security studies Economics and Econometrics Labour economics Economic capital media_common.quotation_subject 05 social sciences 0211 other engineering and technologies Natural catastrophe 02 engineering and technology Variance (accounting) Monetary economics Affect (psychology) Econometric model Accounting 0502 economics and business Economics 050207 economics Finance media_common |
| Zdroj: | Journal of Risk and Insurance. 84:851-879 |
| ISSN: | 0022-4367 |
| DOI: | 10.1111/jori.12134 |
| Popis: | In the aftermath of a natural catastrophe, there is increased demand for skilled reconstruction labor, which leads to significant increases in reconstruction labor wages and hence insured losses. Such inflation effects are known as “Demand Surge” effects. It is important for insurance companies to properly account for these effects when calculating insurance premiums and determining economic capital. We propose an approach to quantifying the Demand Surge effect and present an econometric model for the effect that is based on 192 catastrophe events in the United States. Our model explains more than 75 percent of the variance of the Demand Surge effect and is thus able to identify the key drivers of the phenomenon. |
| Databáze: | OpenAIRE |
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