Dynamic Risk Assessment in the Insurance Industry Based on a High-risk Underwriting Decision Model
Year: 2025
Type: article
Abstract: With the increasing frequency of extreme weather events, dynamic risk assessment has emerged as a crucial research topic for the sustainable development of the insurance industry. To address the underwriting decision-making challenges faced by insurers in high-risk areas, this study develops a risk assessment model that integrates historical data to predict property loss ratios in such regions for the coming year. By considering the perspectives of both insurers and policyholders, we propose a utility value model that evaluates the utility values of risk-free and risk-exposed properties separately. This framework derives the conditions for insurance underwriting and identifies a reasonable range for premium rates, thereby determining the optimal underwriting strategy for insurers. Finally, the model is applied to two regions in China—Fujian and Guizhou—for validation. Simulation results demonstrate that the proposed model exhibits high predictive accuracy and sensitivity in risk assessment, confirming the feasibility of the proposed underwriting strategy.
DOI: 10.61784/wjebr3045
Authors: BinHao Guo, ShuJie Shi, GuoLiang Wen, XingPeng Zhuo
Institution: National University of Defense Technology
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
SDG: Climate action
Open Access status: hybrid
OpenAlex ID: W4411103257