Abstract
AbstractWith recent epidemics such as COVID-19, H1N1 and SARS causing devastating financial loss to the economy, it is important that insurance companies plan for financial costs of epidemics. This article proposes a new methodology for epidemic and insurance modelling by combining the existing deterministic compartmental models and the Markov multiple state models to facilitate actuarial computations to design new health insurance plans that cover epidemics. Our method is inspired by the seminal paper (Feng and Garrido (2011) North American Actuarial Journal, 15, 112–136.) of Feng and Garrido and complements the work of Hillairet and Lopez et al. in Hillairet and Lopez ((2021) Scandinavian Actuarial Journal, 2021(8), 671–694.) and Hillairet et al. ((2022) Insurance: Mathematics and Economics, 107, 88–101.) In this work, we use the deterministic SIR model and the Eyam epidemic data set to provide numerical illustrations for our method.
Publisher
Cambridge University Press (CUP)
Reference27 articles.
1. An option-based operational risk management model for pandemics;Hua;North American Actuarial Journal,2009
2. Contributions to the mathematical theory of epidemics. II. The problem of endemicity;Kermack;Proceedings of the Royal Society of London. Series A, Containing Papers of a Mathematical and Physical Character,1932
3. SIR-type epidemic models as block structured markov processes;Lefevre;Methodology and Computing in Applied Probability,2020
4. Ruin problems for epidemic insurance;Lefevre;Advances in Applied Probability,2021
5. Ross, R. (1910) The Prevention of Malaria. London: John Murray Publishing House.