Exploring the Relationship Between Natural Disasters and Insurance Stock Market

Currently, the impact of natural disasters is increasingly substantial and conspicuous. This influence has implications not only for individuals' livelihoods, a country's overall economic output, and the rate of joblessness, but also for the financial market. The objective of this article is to investigate the effects of natural catastrophes on the stock price of the insurance business. This article uses four different insurance firms' stock values as a data sample. Moreover, this article uses the Long Short-Term Memory (LSTM) model to forecast the stock values of the insurance industry in the absence of catastrophic events. The study then compares the projected prices with the actual prices. Furthermore, this study diverges from past research by specifically examining storms as opposed to other forms of damage, with a particular emphasis on analyzing the effects on insurance firms' stock values. The findings suggest that the stock prices of the four firms are experiencing distinct forms of decline. This study establishes that storm catastrophes have an immediate detrimental impact on the stock markets of insurance firms. Consequently, insurance firms have to formulate policies that mitigate losses, while investors should exercise prudence during storm catastrophes.