Where Home Insurance Meets Climate Change: Making Sense of Climate Risk, Data Uncertainty, and Projections

By Vyacheslav Lyubchich, K. Halimeda Kilbourne, Yulia R. Gel

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Abstract

We present an attribution analysis of residential insurance losses due to noncatastrophic weather events and propose a comprehensive statistical methodology for assessment of future claim dynamics in the face of climate change. We also provide valuable insight into uncertainties of the developed forecasts for claim severities with respect to various climate model projections and greenhouse emission scenarios. The results of our study pave the way for more accurate short- and long-term cost-benefit assessment of climate adaptation in the insurance sector.

Keywords: Climate-related risk management, property damage, forecasting, climate adaptation

Citation

Lyubchich, Vyacheslav, K. Halimeda Kilbourne, and Yulia R. Gel, "Where Home Insurance Meets Climate Change: Making Sense of Climate Risk, Data Uncertainty, and Projections," Variance 12:2, 2019, pp. 278-292.

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Mission Statement

Variance (ISSN 1940-6452) is a peer-reviewed journal published by the Casualty Actuarial Society to disseminate work of interest to casualty actuaries worldwide. The focus of Variance is original practical and theoretical research in casualty actuarial science. Significant survey or similar articles are also considered for publication. Membership in the Casualty Actuarial Society is not a prerequisite for submitting papers to the journal and submissions by non-CAS members is encouraged.