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Tax-Deductible Pre-Event Catastrophe Loss Reserves: The Case of Florida.
Milidonis, Andreas., and Martin Grace.
ASTIN Bulletin, 38 (1): 13-51.
Publication year: 2008
We examine the use of catastrophe loss reserves in a stylized one-period model of insurance.
First, we provide estimates of catastrophe loss distributions using data since 1949.
Second, we incorporate anticipated changes in consumer behavior due to the institution of catastrophe reserves.
Third, we discover large potential social welfare gains for a wide range of actuarial assumptions.