Risk evaluation

Risk evaluation

On policy level:
1. n incidents during a certain time period
  1. Total loss z = x_1+...+x_n,
    1. where x_i denotes the loss of the i-th incident
On portfolio level:
1. N different claim sizes during a certain time period
  1. Total portfolio loss Z = X_1+...+X_N,
    1. where X_i denotes the total loss of the i-th type of claim
Compensations will differ according to the type of contract:
1. z = actual total replacement value, f(x)= actual compensation of the each loss:
  1. z = f(x_1)+...+f(x_n)
  2. Given the i-th loss x_i, the contract f(x_i) determines the i-th compensation.
    1. Can now include the possibility of e.g. only covering losses x_i within a certain range, say [y,y+b], for y,b > 0:
      1. f(x_i) = 0 if x_i < y
        f(x_i) = x_i - y, if y < x_i < y+b
        f(x_i) = b, if x_i > y+b
        where y denotes a certain deductible
        (Reinsurance can be arranged in a similar way)
2. The insurance company is not necessarily obliged to cover the whole loss of the policy holder!

Resumen del Recurso

	Creado por Mari Gunnerud hace alrededor de 10 años