Homeowners Ratemaking Revisited (Use of Computer Models to Estimate Catastrophe Loss Costs)

Recent improvements in computer technology and easy access to large quantities of data have eliminated some traditional limitations on insurance ratemaking. The emergence of catastrophe simulation using computer modeling has helped actuaries develop new methods and illustrates the features and benefits of computer modeling for catastrophe ratemaking. Hurricane loss costs as part of homeowners coverage are treated in the main body of the paper; modeling for other catastrophic perils is reviewed in the Appendix.