Research on Property Insurance Profit Forecasting Model and Response Strategy under Extreme Weather

Abstract

In this paper, we propose and design an insurance profit prediction model that effectively handles complex coupled variables to address the issues related to the volatility of the property insurance industry due to the frequent occurrence of extreme weather worldwide and the strong demand of insurance companies for the prediction of insurance profits in the future. Considering the adaptability of the model as well as its relocatability, we comprehensively consider the impacts of various factors on the insurance industry, such as extreme weather, geographic location, insurance market, and national development, and use them as indicators to build an insurance profit prediction model. We quantified and averaged the multivariate influences in the insurance forecasting model and solved the complex coupling variables in the model. We conducted a sensitivity analysis of the model to determine that the model has good robustness, and used this analysis to obtain a strong correlation between the ideal profit margin of the regional insurance industry and the regional insurance profit return, i.e., the ideal insurance profit margin of the regional insurance industry is a key factor affecting the total profit. Meanwhile, the model prediction results obtained by adjusting the model parameters show that under certain conditions, the regional insurance industry can obtain lower or loss profits in the short term, but is profitable in the long term. This study provides a useful reference for the property insurance industry and helps insurers to better predict profits, formulate strategies, and provide effective safeguards for property owners to meet the challenges posed by extreme weather events.