Worth of data and natural disaster insurance

Water Resources Research
By:  and 



The Federal Government in the past has provided medical and economic aid to victims of earthquakes and floods. However, regulating the use of hazard-prone areas would probably be more efficient. One way to implement such land use regulation is through the national flood and earthquake insurance program. Because insurance firms base their premium rates on available information, the benefits from additional data used to improve parameter estimates of the probability distribution (governing actual disaster events) can be computed by computing changes in the premiums as a function of additional data. An insurance firm is assumed to set rates so as to trade off penalties of overestimation and underestimation of expected damages. A Bayesian preposterior analysis is applied to determine the worth of additional data, as measured by changes in consumers’ surplus, by examining the effects of changes in premiums as a function of a longer hydrologic record.

Additional publication details

Publication type Article
Publication Subtype Journal Article
Title Worth of data and natural disaster insurance
Series title Water Resources Research
DOI 10.1029/WR015i006p01763
Volume 15
Issue 6
Year Published 1979
Language English
Publisher American Geophysical Union
Description 4 p.
First page 1763
Last page 1766
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