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October 17, 2025Open Access

Combination of traditional and parametric insurance: calibration method based on the optimization of a criterion adapted to heavy tail losses

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Authors

OLOlivier LopezDNDaniel Nkameni

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Overview

Analysis reveals optimized hybrid insurance can improve claim management for heavy tail losses, suggesting significant cost reductions.

Key Points

  • The hybrid insurance model shows improved performance over traditional contracts, particularly for heavy tail losses.
  • Using a criterion adapted to extreme losses, the optimization process tailors the insurance product effectively.
  • The study combines theoretical convergence results with practical simulations to validate the hybrid model.
  • Empirical analysis on tornado data supports the hybrid contract's advantage over traditional indemnity contracts.

Cite This Study

Lopez et al. (2025) studied this question.

synapsesocial.com/papers/68f19f20de32064e504ddf5ahttps://doi.org/10.48550/arxiv.2507.18207
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