Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/97788
Authors: 
Döhrmann, David
Gürtler, Marc
Hibbeln, Martin
Year of Publication: 
2013
Series/Report no.: 
Working Papers, Institut für Finanzwirtschaft, TU Braunschweig IF44V2
Abstract: 
In the aftermath of a natural catastrophe, there is increased demand for skilled reconstruction labor, which leads to significant increases in reconstruction labor wages and hence insured losses. Such inflation effects are known as 'Demand Surge' effects. It is important for insurance companies to properly account for these effects when calculating insurance premiums and determining economic capital. We propose an approach to quantifying the Demand Surge effect and present an econometric model for the effect that is based on 191 catastrophe events in the United States. Our model explains more than 75% of the variance of the Demand Surge effect and is thus able to identify the key drivers of the phenomenon.
Subjects: 
Demand Surge
Natural Catastrophes
Reconstruction
Insured Losses
JEL: 
G22
J23
J31
Q54
R23
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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