A statistics and physics-based tropical cyclone full track model for catastrophe risk modeling

Abstract

Catastrophe (CAT) risk modeling of perils such as typhoon and earthquake has become a prevailing practice in the insurance and reinsurance industry. The event generation model is the key component of the CAT modeling. In this paper, a physics-based tropical cyclone (TC) full track model is introduced to model typhoons events in the western North Pacific basin. At the same time, a comprehensive test of the model is presented from the perspective of CAT risk modeling for insurance and reinsurance applications. The full track model includes the genesis, track, intensity, and landing models. Driven by the global environmental circulations, the model employs the advection and beta drift theory in atmospheric dynamics to model the track of typhoons. The proposed model is novel in the way of modeling the genesis of TCs with three-dimension kernel distributions in space and time. This enables the simulation of seasonal characteristics of TCs. By generating 10,000-year TC events, we comprehensively test the model from the standpoint of CAT insurance and reinsurance applications. The typhoon hazard model and the generated events can serve as the inputs for assessing the typhoon risk and insured loss caused by winds, rains, floods, and storm surges.