Study On Typhoon Insurance Loss Distribution And Pricing With Stable Distribution In China

Typhoon has an enormous impact on the coastal area of China. Not only the coastal area ofChina is frequently attacked by the typhoon, but also the most of inland province directly orindirectly are influenced by it. Insurance is one of the most widely used tools to transfer andcontrol risk in human society, and also one of the most effective way to recovery economyafter attacked by catastrophe. But at present there is lack of study on typhoon insurance inChina.First, this article analyzes the situation of that people need typhoon insurance for transferringrisk and the insurance company gradually has capacity to develop the new product. It isfocus on loss distribution of the typhoon and the typhoon insurance pricing. This articleanalyzes common loss distributions that always are used in insurance but they are notsuitable for typhoon risk. Then introduces a stable distribution, uses it fitting the lossdistribution of typhoon risk in China, and analyzes typhoon risk and characteristic in ourcountry. Based on the analyze of loss distribution of typhoon, discuss that it is not good touse the traditional way to make the price of typhoon insurance and explores an new typhooninsurance price models which is more fair and reliable.The innovation lies in this article: introducing the stable distribution to analyze the typhoonrisk, doing an empirical analysis of the typhoon risk, fitting the loss distribution of thetyphoon risk, doing a preparatory work for the typhoon insurance, actuarial pricing.