Seismic risk management of insurance portfolio using catastrophe bonds

Katsu Goda

Research output: Contribution to journalArticle (Academic Journal)

13 Citations (Scopus)

Abstract

Parametric earthquake catastrophe bonds are emerging risk transfer instruments for governments and insurers. This study extends a current station-intensity-based trigger method for binary payments, which utilizes direct observation of ground motions at recording stations, by promoting a more flexible multiple-discrete payment structure. A calibration procedure of the bond trigger mechanism for the new approach is demonstrated by focusing upon a realistic portfolio of conventional wood-frame houses in Vancouver, Canada. Numerical results indicate that the new method with a multiple-discrete payment structure decreases the magnitude of trigger errors significantly in terms of seismic loss, and facilitates the flexible adoption of various payment structures for catastrophe bonds. Furthermore, a synergy between the calibration of parametric catastrophe bonds and the current performance-based earthquake engineering framework is highlighted.
Original languageEnglish
Pages (from-to)570-582
Number of pages13
JournalComputer-Aided Civil and Infrastructure Engineering
DOIs
Publication statusPublished - 25 Jun 2015

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