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Natural Hazards

, Volume 90, Issue 1, pp 445–460 | Cite as

Discrete dynamical Pareto optimization model in the risk portfolio for natural disaster insurance in China

  • Shujian MaEmail author
  • Juncheng Jiang
Original Paper

Abstract

Disaster insurance is an effective way in reducing and sharing natural disaster risk. In this paper, a special risk management model based on the cooperative insurance among the operating governments, insurance market and public is proposed. Firstly, we divided the study areas into units. In each unit, we analyze the risk stochastic process of the insurers and the operating governments, the latter providing the policy support and the subsidy. Secondly, the processes of the fixed risk initial value, the premium income, the transaction cost and the claim are all considered in the risk stochastic process of the insurers. In the risk stochastic process of the public, we consider the pure income after claim and the subsidy from the operating governments. Then, we introduce the ruin probability and stable operation of insurers, the stopping time of the ruin probability and the recovery capability of the public. The risk portfolio stochastic optimal model, which shows that each party can effectively participate in this management model, is established in order to ensure the equilibrium between the insurance supply and demand. The ruin probability, stability of insurance market and the recovery capability of the public are considered completely in this model. Finally, we conduct numerical simulation to verify the results of the models.

Keywords

Stochastic model Pareto optimization Risk portfolio Natural disaster risk Insurance 

Notes

Acknowledgements

This research has been funded by National Natural Science Foundation of China (No. 41101509), National Social Science Foundation of China (No. 15BJY160), Humanity and Social Science Youth Foundation of Ministry of Education of China (Nos. 12YJC630290, 17YJC630102) and Postdoctoral Foundation of Jiangsu Province (1501048A), and the Project of Philosophy and Social Science Research in Colleges and Universities in Jiangsu Province (2015SJB089). Comments and suggestions of an anonymous referee are very helpful in improving the paper.

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Copyright information

© Springer Science+Business Media B.V. 2017

Authors and Affiliations

  1. 1.School of Physical and Mathematical SciencesNanjing Tech UniversityNanjingChina
  2. 2.School of Economics and ManagementNanjing Tech UniversityNanjingChina
  3. 3.Jiangsu Key Laboratory of Urban and Industrial Safety, College of Safety Science and EngineeringNanjing Tech UniversityNanjingChina

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