Regency B
A Severe Weather Index Based on the Historic National Oceanic and Atmospheric Administration (NOAA) Data (304047)
*Thilini Vasana Mahanama, Texas Tech University
Dimitri Volchenkov, Texas Tech University
Keywords: Empirical Copula, Severe weather events, catastrophe bonds
Severe weather phenomena, such as tornadoes, floods, and wildfire pose risks to life and property, requires the intervention of authorities. One of the most visible consequences of changing climate is an increase in the intensity and frequency of extreme weather events. The relative strengths of the disasters grow far beyond the habitual seasonal maxima, often resulting in the subsequent increase in property losses. Thus, insurance policies should be modified to sustain regular catastrophic weather events. Texas Tech University proposes a severe weather index for the total loss from natural disasters in the United States based on how the insurance policies should be adapted to the increasingly volatile climate conditions. National Oceanic and Atmospheric Administration severe weather database is used for this study. It consists of millions of data over 74 types of severe weather events for every state within the United States from 1950 to 2018. To describe losses from extreme weather conditions, Empirical copulas have been used. Our work would help the assessment of risk attributed to severe weather events and improve communications between insurers and their clients.