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Taiwan is located in the Circum-Pacific seismic belt, there are many frequent earthquakes which cause serious damage. In 2002, Taiwan sets up TREIF (Taiwan Residential Earthquake Insurance Fund) and carries out the political residential earthquake insurance. However, the uncertainty of earthquake catastrophe risk will affect the health of the government finance. The application of index-based insurance in catastrophe risk management will provide an effective and practical solution to the post-disaster relief and post-disaster reconstruction.
The index-based insurance is a hot topic in the international insurance industry in recent years. Depend on the advantages of information transparency, low cost of claiming, moral hazard reduction, and so on, the index-based insurance will help the government to spread the catastrophe risk. Currently, the weather index-based insurance has been successfully applied in many regions and countries, the catastrophe index-based insurance has also been successful piloted. This paper will introduce the idea of this new type of insurance into the residential earthquake insurance program in Taiwan, describe the basic situation of the earthquake index-based insurance, and focus on the calculation of the trigger indexes.
Around this theme, this paper has three aspects. First of all, it expounds the origin and the development of index-based insurance. Secondly, it studies the design idea of index-based insurance, and provide the guidance and basis for the proposed method in this paper. Thirdly, it specifically calculates the trigger indexes of Taiwan residential earthquake index-based insurance based on the historical data of Taiwan earthquake disaster. Finally, it introduces the in-depth development of catastrophe index.
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