Assessing Extreme Weather Risks for Insurance Underwriting with ARIMA and Entropy Weight Method: Insights from Brazil and India
DOI:
https://doi.org/10.54097/7j0nc888Keywords:
ARIMA, Entropy Weight Method, TOPSIS, Insurance Assessment Model.Abstract
As the frequency of extreme weather events increases around the world, it has had a great impact on the insurance industry, especially in Brazil and India, which suffer frequent natural disasters. Insurance plays a significant role in risk sharing and post-disaster reconstruction, but due to the uncertainty of profitability, whether insurance companies should underwrite insurance policies in these areas has become an important issue facing them. Given this, this paper establishes an insurance assessment model based on extreme weather based on ARIMA and entropy weight method and combined with TOPSIS. By evaluating the potential loss and profit of the insurance company after the insurance, to judge whether the insurance company should be insured in the field of extreme weather insurance in a given area. Last, this paper applied our model to Brazil and India, countries that are experiencing severe meteorological disasters, and concluded that it is wise for insurance companies to underwrite policies there.
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