Abstract*Actuaries are often asked to provide a range or confidence level for the loss reserve along with a point estimate. Traditional methods of loss reserving do not provide an estimate of the variance of the estimated reserve, and actuaries use various ad hoc methods to derive a range for the indicated reserve. We use a Monte Carlo simulation method to compare various loss reserve estimation methods, including traditional methods and regression-based methods of loss reserving.
Over the several past decades, methods have been developed to predict structural damage on a regional basis. This paper describes an effort to collect damage and loss data from the Loma Prieta Earthquake and the comparison of these data with the results calculated by an existing loss estimation model. First the intensity prediction was evaluated by comparing the model results with the Modified Mercalli Intensity (MMI) maps issued by the U.S. Geological Survey in areas affected by the Loma Prieta earthquake. Then, the study concentrated on losses of the City of Watsonville in the County of Santa Cruz. The sensitivity of the loss due to variation in some of the basic parameters, such as intensity, deductible and liquefaction potential, were studied and discussed. The damage distribution of wood-frame buildings was also investigated. Results of calculations were compared with the collected real loss data (on-site estimate and permit estimate) from the City of Watsonville. The comparison shows that while the extant model offers some insight into loss distributions, more research is clearly necessary to improve the physical underpinnings of the methodology and to provide the necessary statistical data on which these approaches are based.
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