GIS-based Wildfire Catastrophic Risk Economic Capital Modelling
Models used for Wildfire catastrophe insurance as of today are not considering substantial information, such as geographic information and environmental constraints. The objective of the project is to establish a theoretical framework and an empirical process to enhance Aviva Canada’s current Wildfire Economic Capital (EC) model, to be able to determine the amount of capital needed to be allocated to ensure the company remains solvent, in case of occurrence of risks. The new model will incorporate spatial Geographic Information System (GIS)-based information and other non-spatial information and it will cater for the nature of the heavy-tailed data. It is expected that this approach can be adapted and extended to Aviva Canada’s other natural and man-made Catastrophe risk EC models with similar needs.