This is a multi-essay dissertation in the area of dynamic models of the insurance markets. I study issues in insurance markets by examining individual behavior and industry performance in dynamic settings. My first essay studies household life insurance demand and saving decisions by applying a heterogeneous-agent life cycle model with wage shocks and mortality shocks. This essay proposes the most important determinants of household life insurance demand, and shows the joint decision of life insurance purchase between couples. My second essay focuses on the property-liability insurance market, and aims to study the impact of one catastrophe event on an insurer’s underwritings and capital raising strategy. The two-period cash flow model is built to also explore what kind of insurers can benefit from catastrophic risk underwritings. My third essay extends the second essay by incorporating a dynamic cash flow model with a series of loss shocks. I find the dynamic interaction between the insurer’s balance sheet and its capital rationing resulting from loss shocks. The model generates a non-cyclical behavior of output changes in the insurance market, and this suggests the current asymmetric, unpredictable and random underwriting cycles are temporary responses to loss shocks.

This thesis examines the problem of impact of catastrophic natural events on insurance and reinsurance markets, with special focus on 2005 hurricane Katrina. It aims to analyze and evaluate the consequences of large scale economic loss on global insurance market. First part of the thesis describes the event and its implications. Impact on oil and gas industry and others is discussed. Main section is focused on repercussions of this event for both local and global insurance markets. Influence on selected subjects and new trends observable after Katrina are considered. Changes to alternative risk transfer instruments after 2005 are investigated.

Internalizing carbon value for forest landowners has the potential to increase carbon supply in forest and mitigate CO2 in the atmosphere. In this study, we developed a modified Hartman model to investigate how payments of carbon offsets impact the optimal management of hardwood forests in Kentucky under condition of catastrophic events. Different carbon markets were modeled and several sensitivity analyses were performed to examine varied management strategies to achieve maximized financial return or highest environmental benefits. Furthermore, another model was developed to incorporate the impact of risk aversion to price uncertainty using E-V model. We were able to identify the most favorable scenarios for landowners and society in the face of price variability and catastrophic risk.

This article is a literature review about global catastrophic risks. Its contribution is to give an overview of the research field in general and highlight the main potential catastrophic areas linked with recent studies. In many movies and TV shows, we can see our civilization collapse in various ways: Gigantic asteroids hit the earth and obliterate all life, nuclear wars emerge, artificial intelligence evolves and starts wars with humans, pandemics spread, and other kinds of catastrophic events with mass death or extinction of all life happen. Thus, even if these are extreme events and fiction, we should raise the question how likely it is that one or more of these events can occur in the near and far future. Although calculated probabilities of impact are low for the future such as tomorrow, in 10, 100 or a million years from now, this could actually be reality. Nevertheless, why should we care about the risks of these global catastrophic events today and what could be done to prevent or reduce the risk of a global catastrophe? In this paper we will discuss core content, such as different risks and ways to reduce them internationally, as well as the scientific context of the field. In fact, there are events that can be catastrophic on a global scale and happen in the near future, even if we do not know exactly when. Hence, specific risk assessment and proper mitigation strategies are necessary in order to maintain the human population. This article states that serious research is a basis for decision makers in particular, who invest funds in countermeasures.

因台灣全島具有許多地震斷層，各處均有可能發生地震，又大型地震易伴隨之地震變動，常有斷層、山崩、地裂、地盤隆起、陷沒、崩崖、噴沙、噴泥、土壤液化、井水變化之情形發生。地震所造成之損失相當嚴重，若僅賴政府之事後救濟，將造成納稅人及國家沉重之財政負荷，相形之下，使人民事前投保地震保險，共同分散損失，乃較佳選擇。有鑑於位於高地震風險地區之國家，例如，位於「環太平洋地震帶」之日本、紐西蘭、美國加州，及位於「歐亞地震帶」之土耳其等，均陸續發展地震保險制度，故本論文欲藉各國地震保險制度，探討我國目前住宅地震保險制度之完善性。 本論文以此為主題，探討之內容包含地震風險是否具可保性、政府是否應介入地震保險市場、綜合天災保險之可行性、地震保險保費釐定之考量因素、是否應強制投保地震保險、強制承保之必要性、目前之投保方式是否構成違法之搭售行為、及理賠標準之爭議等問題，於論文最後並提出相關條文之修正建議。 / Earthquakes occur frequently in Taiwan, and they always lead to catastrophic losses. If the government invests more taxpayer dollars into ex post compensation, it will be unfair to other taxpayers. For insurance plays an important role in the modern societies. It can successfully distribute the risks ex ante and contribute to make societies more stable. So this paper introduces Earthquake Insurance to solve the problem, discusses the topic from different aspects, and does a comparative research on legislation between America, Japan, New Zealand, Turkey and Taiwan. The outline of this paper discusses the insurability, the ways of risk management, the need of government intervention, whether to introduce mandatory insurance, the coverage extent the insurer can provide, and how to determine the premium. At the last of this paper, the author also raises some suggestions of Insurance Law.

台灣位處環太平洋地震帶，為全球地震風險潛勢較高的地區之一；因台灣高科技產業蓬勃發展，地震保險需求殷切，再加上開放保險費率自由化的政策及金控效應，趨使保險業間競爭白熱化，惡性價格競爭及保險經紀人的推波助瀾，保險公司的清償能力面臨重大考驗。 台灣在保險監理方面如同日本、美國採行風險基礎資本額（RBC）制度，惟國際間位處高度地震風險潛勢之國家大都另建立一套地震保險監理機制，以確保保險公司的巨災準備金足以支付回歸期地震所造成的損失，其中以美國加州及加拿大政府均採用地震保險PML申報制度作為地震保險監理之依據最值得台灣學習。 地震保險PML評估可採用CRESTA Zone平均損失幅度表計算或採用認許的地震風險評估電腦軟體推估獲得，實施的關鍵為主管機關應建立具有公信力的CRESTA Zone平均損失幅度表。本文特就二種評估方式的利弊做深入的比較分析，並藉由地震風險評估軟體的架構說明影響地震保險PML的因素與權重，作為保險公司落實地震風險管理之依據。 本研究參考Solvency II的三大支柱提出建立地震保險監理機制之結論與建議如下： 1.鼓勵建立保險公司的地震風險管理機制。 2.公佈CRESTA Zone平均損失幅度表，作為保險公司地震保險PML申報依據，以落實產物保險業之地震保險監理機制。 3.依據保險公司申報資料，提供保險主管機關實施差異化管理之依據。 4.主動揭露經營績效、強化保險市場紀律，建立公平合理的經營環境。 期待藉由建立適當的地震保險監理機制，減輕或消弭產物保險市場面臨自由化的惡性價格競爭與保險經營面的不合理現象，進而達到健全保險經營環境、促進保險業長期穩定發展，並確保社會大眾之保險權益的目標。 關鍵詞：地震保險監理機制、地震保險PML、巨災準備金、風險基礎資本額、地震風險評估軟體 / Located at the Pacific Rim earthquake zone, Taiwan has been recognized as one of the severe seismic hazard areas in the world. With the bloom of high tech industry in the past two decades, the demand of earthquake insurance has been considerably increasing. However, along with the liberalization of insurance market, the new business model of financial holdings and the expanding influence from international brokers, insurance companies’ solvency capacity has been significantly challenged. Taiwanese Government, same as Japan and U.S., adopts Risk-Based Capital (RBC) method in insurance supervision, while most countries with high earthquake potential have set up independent earthquake insurance supervision systems to ensure insurers’ earthquake reserves capable to compensate the huge earthquake losses. Among all the measures, the PML reporting system adopted by Canada and the State of California to regulate and trace insurance companies’ financial statuses could be an adequate paradigm for Taiwan. The PML estimation could be obtained either using computer models or following default mean damage ratio table. This research compares the strength and weakness between these two methods, and presents the importance of parameters and key points in earthquake insurance management. Based on the three pillars of Solvency II, the conclusions and recommendations of this paper are: (1)Encourage insurance companies to build up the earthquake risk management mechanism; (2)Establish the official default mean damage ratio table for PML reporting system; (3)Adopt differential supervision practice to different level insurance companies; (4)Promote the self-disclosure of key business information and enhance market discipline. Establishing a sound earthquake insurance supervision system would not only ease the immoderate low-price competition but the whole insurance environment could also be stabilized and improved. It will ultimately achieve the objective to insure society liability and benefit the public as well. Keywords: Earthquake Insurance, Earthquake Model, Catastrophic Risk Management, Insurance Supervision, Risk-Based Capital, CRESTA Zone, PML