Dynamic modeling of public and private decision-making for hurricane risk management including insurance, acquisition, and mitigation policy
Author
Guo, Cen; Nozick, Linda; Kruse, Jamie; Millea, Meghan; Davidson, Rachel; Trainor, Joseph
Abstract
We develop a computational framework for the stochastic and dynamic modeling of regional natural catastrophe losses with an insurance industry to support government decision-making for hurricane risk management. The analysis captures the temporal changes in the building inventory due to the acquisition (buyouts) of high-risk properties and the vulnerability of the building stock due to retrofit mitigation decisions. The system is comprised of a set of interacting models to (1) simulate hazard events; (2) estimate regional hurricane-induced losses from each hazard event based on an evolving building inventory; (3) capture acquisition offer acceptance, retrofit implementation, and insurance purchase behaviors of homeowners; and (4) represent an insurance market sensitive to demand with strategically interrelated primary insurers. This framework is linked to a simulation-optimization model to optimize decision-making by a government entity whose objective is to minimize region-wide hurricane losses. We examine the effect of different policies on homeowner mitigation, insurance take-up rate, insurer profit, and solvency in a case study using data for eastern North Carolina. Our findings indicate that an approach that coordinates insurance, retrofits, and acquisition of high-risk properties effectively reduces total (uninsured and insured) losses.
Description
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
Date
2022-06-08
Citation:
APA:
Guo, Cen, & Nozick, Linda, & Kruse, Jamie, & Millea, Meghan, & Davidson, Rachel, & Trainor, Joseph. (June 2022).
Dynamic modeling of public and private decision-making for hurricane risk management including insurance, acquisition, and mitigation policy.
,
(),
-
. Retrieved from
http://hdl.handle.net/10342/10976
MLA:
Guo, Cen, and Nozick, Linda, and Kruse, Jamie, and Millea, Meghan, and Davidson, Rachel, and Trainor, Joseph.
"Dynamic modeling of public and private decision-making for hurricane risk management including insurance, acquisition, and mitigation policy". .
. (),
June 2022.
April 25, 2024.
http://hdl.handle.net/10342/10976.
Chicago:
Guo, Cen and Nozick, Linda and Kruse, Jamie and Millea, Meghan and Davidson, Rachel and Trainor, Joseph,
"Dynamic modeling of public and private decision-making for hurricane risk management including insurance, acquisition, and mitigation policy," , no.
(June 2022),
http://hdl.handle.net/10342/10976 (accessed
April 25, 2024).
AMA:
Guo, Cen, Nozick, Linda, Kruse, Jamie, Millea, Meghan, Davidson, Rachel, Trainor, Joseph.
Dynamic modeling of public and private decision-making for hurricane risk management including insurance, acquisition, and mitigation policy. .
June 2022;
():
.
http://hdl.handle.net/10342/10976. Accessed
April 25, 2024.
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