Introduction 09

01 Introduction
Importance of CAT Modeling 10
02 Insurance
Various Type of Account 11
03 Benefits of Insurance
CONTENTS
Steps for Cat Modeling 12
04 Types of Insurance
Premium and Types 13
05 Terms of Insurance

Pros and cons of Insurance Premium Calculation 14

06
Cat Modeling History 15
07 History of Insurance

08 CAT Modeling Recent Trends and Future Direct 16

(C) 2024_manimanish
 INSURANCE
Definitions

Insurance is a financial
arrangement that provides
protection against financial loss
or risk. It works on the principle
of risk pooling, where individuals
or entities pay regular premiums
to an insurance company. In
return, the company promises to
provide financial compensation
or coverage in case of specific
events or losses covered by the
policy.

(C) 2024_manimanish
Risk Pooling: Insurance collects premiums Legal Contract: Insurance is a legally binding
from many individuals or businesses, pooling contract between the policyholder and the
the risks. This spreads the risk among many insurance company, specifying the terms,
policy holders. conditions, and coverage details

Premium Payments: Policy holders pay Characteristics Claim Process: When a covered event
regular premiums to the insurance company. of occurs, the policyholder can file a claim with
The amount and frequency of payments the insurance company. The company then
vary depending on the type of insurance and Insurance assesses the claim and provides
coverage level. compensation based on the policy terms.

Deductibles and Co-Payments: Some Coverage: Insurance policies outline the

insurance policies require policyholders to types of risks and events that are covered.
pay a portion of the cost out-of-pocket This could include things like accidents,
before the insurance coverage kicks in. illnesses, property damage, or legal liabilities
(C) 2024_manimanish
 1. Financial Protection INSURANCE BENEFITS 4.Legal Requirement:
Insurance provides financial Some types of insurance, such as
protection against unforeseen auto insurance in many
events such as accidents, illnesses, jurisdictions, are legally required,
property damage, and other risks. helping to ensure compliance
with regulations .

2. Risk Management: 5. Investment and Savings:

By pooling risks among many Certain types of insurance
policyholders, insurance helps policies, like whole life or universal
manage and mitigate individual life insurance, also have
financial risks. investment components,
providing savings or investment
opportunities.

3. Peace of Mind: 6. Access to Services:

Knowing that there is coverage for Insurance can provide access to
potential risks or losses offers a range of services, such as
peace of mind and reduces medical care, legal assistance, or
anxiety about the future. home repairs, depending on the
(C) 2024_manimanish
type of policy.
 Health Insurance

Property Insurance 1 Auto Insurance

8 2

Various
Business Insurance 7 Types of 3 Home Insurance
Insurance

6 4
Disability Insurance 5 Life Insurance

Travel Insurance
(C) 2024_manimanish
 Various Types of Insurance
❖ Health Insurance: Covers medical expenses, including hospital stays, doctor visits, surgeries, and prescription medications.
Examples include individual health insurance, family health insurance, and Medicare.
❖ Auto Insurance: Covers damages and liabilities related to vehicle accidents. It includes liability coverage, collision coverage,
comprehensive coverage, and uninsured/underinsured motorist coverage.
❖ Home Insurance: Provides coverage for damages to a home and personal property due to events like fire, theft, or natural
disasters. It also covers liability for accidents that occur on the property.
❖ Life Insurance: Provides a financial benefit to beneficiaries upon the insured person’s death. Types include term life
insurance, whole life insurance, and universal life insurance.
❖ Disability Insurance: Offers income replacement if the policyholder becomes unable to work due to illness or injury. It can
be short-term or long-term.
❖ Travel Insurance: Covers unexpected events while traveling, such as trip cancellations, medical emergencies, lost luggage,
and travel delays.
❖ Business Insurance: Protects businesses from various risks, including property damage, liability claims, and employee-
related issues. Types include general liability insurance, property insurance, and workers' compensation.
❖ Liability Insurance: Covers legal liabilities for damages or injuries caused to others. This can be personal liability insurance
or professional liability insurance, depending on the context.
❖ Property Insurance: Provides coverage for physical assets such as buildings, machinery, and inventory against damage or
loss due to events like fire, theft, or natural disasters like earthquake, flood , cyclone tornado etc.

Note:- Each type of insurance is designed to address specific risks and needs, providing tailored coverage and protection for
different aspects of personal or professional life. (C) 2024_manimanish
Insurance Related Icons

(C) 2024_manimanish
 Important Terms Related to the Insurance
1. Premium Definition: The amount of money paid periodically (e.g., monthly, quarterly, annually) to maintain an insurance policy . Example: A
policyholder pays a $200 monthly premium for their health insurance coverage.

2. Deductible Definition: The amount the policyholder must pay out-of-pocket before the insurance company starts to pay for covered
expenses . Example: If you have a $500 deductible on your car insurance, you must pay the first $500 of any covered repairs or claims.

3. Copayment (Co-Pay)Definition: A fixed amount the insured pays for covered services at the time of receiving care. It’s a part of the cost-
sharing in health insurance. Example: You might have a $20 copayment for a doctor’s visit or prescription.

4. Coinsurance Definition: A percentage of the cost of a covered service that the insured must pay after the deductible has been met. Example:
After meeting your deductible, you might have to pay 20% of the cost of a medical procedure, while the insurance covers the remaining 80%.

5. Coverage Definition: The scope of protection provided by an insurance policy, including the types of risks or events that are insured. Example:
Homeowners insurance coverage might include protection against fire, theft, and certain natural disasters.

6. Exclusion Definition: Specific conditions or situations that are not covered by an insurance policy . Example: A health insurance policy may
exclude coverage for elective cosmetic surgery.

7. Limit Definition: The maximum amount an insurance company will pay for a covered loss or claim. Example: A health insurance policy might
have a $1 million lifetime limit on coverage for certain treatments.

8. Beneficiary Definition: The person or entity designated to receive the insurance benefits upon the insured’s death or during certain events .
Example: In a life insurance policy, the beneficiary might be a family member who receives the payout upon the policyholder’s death.

9. Underwriting Definition: The process used by insurers to evaluate the risk of insuring a person or entity, and to determine the terms and
(C) 2024_manimanish
premium of the policy. Example: An underwriter might assess your health history to set the premium for a life insurance policy.
10. Claim Definition: A request made by the insured for payment of benefits under an insurance policy following a covered loss or event.
Example: If your car is damaged in an accident, you would file a claim with your auto insurance company for repair costs.

11. Adjuster Definition: A person employed by an insurance company who investigates and assesses insurance claims to determine the amount
payable. Example: After you file a claim for property damage, an adjuster may visit your home to evaluate the extent of the damage.

12. Rider (Endorsement)Definition: An additional provision or amendment to an insurance policy that modifies the coverage or terms.Example:
You might add a rider to your home insurance policy to cover valuable jewelry not included in the standard coverage.

13. Policyholder Definition: The individual or entity who owns the insurance policy and is responsible for paying the premiums. Example: If you
purchase a life insurance policy, you are the policyholder.

14. Waiting Period Definition: A period that must pass before certain benefits or coverage become effective or before a claim can be made.
Example: Health insurance policies often have a waiting period before coverage for pre-existing conditions kicks in.

15. Premium Refund Definition: A return of premiums paid if a policy is canceled or if certain conditions are met. Example: Some life insurance
policies offer a premium refund if the policyholder outlives the term of the policy.

16. Actuarial Table Definition: A table used by insurers to determine the probability of certain events occurring, such as death or disability, based
on statistical data. Example: Actuarial tables help insurance companies set premiums by estimating the risk associated with insuring individuals.

17. Moral Hazard Definition: The risk that the behavior of the insured may change as a result of having insurance coverage, potentially leading to
higher losses. Example: A person with comprehensive auto insurance might be less careful about securing their vehicle, increasing the risk of
theft.

18. Self-Insured Retention (SIR)Definition: A portion of the risk that the policyholder retains and must cover before the insurance company
begins to pay. Example: In a liability policy, a company might have a $50,000 SIR, meaning it must cover the first $50,000 of any claim before
(C) 2024_manimanish
insurance coverage applies.
 Pros and Cons of Insurance

PROS
Financial Protection
Peace of Mind
Risk Management
Legal Compliance
Access to Services
Investment Opportunities Cost
Income Replacement Complexity
Moral Hazard
Claims Denials
Over- Insurance
Limited Coverage
Claims Processing Time
Deductibles and Co-Payments
CONS
(C) 2024_manimanish
 Pros of Insurance
Insurance is a valuable tool for managing risk and providing financial security, but like any financial product, it has both advantages and
disadvantages. Here’s a breakdown of the pros and cons:

❖ Financial Protection: Insurance provides financial coverage against unexpected losses or damages, such as medical expenses, property
damage, or liability claims .Example : Health insurance can help cover high medical bills, reducing the financial burden on the insured.

❖ Peace of Mind: Knowing you have coverage in place for potential risks or losses can reduce stress and offer peace of mind. Example:
Home insurance gives you confidence that your property is protected against unforeseen events like fire or theft.

❖ Risk Management: Insurance helps manage and distribute risk among many policyholders, reducing the impact of a loss on any single
individual or business. Example: Auto insurance spreads the financial risk of car accidents among all policyholders.

❖ Legal Compliance: Some types of insurance are legally required, ensuring compliance with laws and regulations. Example: Many
jurisdictions require drivers to have auto insurance to cover potential accidents.

❖ Access to Services: Insurance can provide access to a range of services and benefits that might otherwise be unaffordable. Example:
Health insurance often includes access to a network of healthcare providers and preventive care services.

❖ Investment Opportunities: Some insurance policies include investment components, offering potential growth or savings benefits.
Example: Whole life insurance policies often have a cash value component that grows over time.

❖ Income Replacement: Insurance such as disability or life insurance can replace lost income in the event of illness, injury, or death.
Example: Disability insurance provides income replacement if you are unable to work due to a medical condition.
(C) 2024_manimanish
 Various Image Related to Insurance

Note:-This Image show insurance of Automobile, Businessman hand clicks insurance icons to car, travel, family...
Life/ health and Property Insurance Coverage.

Torn paper with word are you covered

Happy family in the park sunset light. family on weekend running...
(C) 2024_manimanish
 Cons of Insurance
❖ Cost: Insurance premiums can be expensive, particularly for comprehensive coverage or higher-risk individuals.
Example: High premiums for comprehensive health insurance or high-risk auto insurance can strain personal finances.

❖ Complexity: Insurance policies can be complex and difficult to understand, with terms, conditions, and exclusions that may be confusing.
Example: The fine print in a policy might include exclusions that could lead to a claim being denied.

❖ Deductibles and Co-Payments: Insurance policies often include deductibles and co-payments, which can lead to out-of-pocket
expenses. Example: Health insurance might require significant co-payments or deductibles before coverage kicks in.

❖ Claims Denials: Insurance claims can be denied due to policy exclusions, misinterpretations, or other reasons.
Example: A claim for a pre-existing condition might be denied under certain health insurance policies.

❖ Over-Insurance: Buying more coverage than needed can result in unnecessary expenses .Example: Purchasing high levels of coverage for
minor risks might not be cost-effective.

❖ Limited Coverage: Policies often have limits and exclusions that may not cover all potential risks or losses. Example: A homeowner’s
insurance policy might not cover damage from certain natural disasters like earthquakes.

❖ Moral Hazard: Insurance coverage might lead to riskier behavior or complacency, knowing that losses are covered .example: Having
comprehensive auto insurance might lead to less cautious driving.

❖ Claims Processing Time: The process of filing and processing claims can be time-consuming and involve bureaucracy .Example: It
might take weeks or months to resolve a claim and receive compensation.
(C) 2024_manimanish
 Natural Disasters

Note : The above images shows natural perils like(C)Earthquake,

2024_manimanish Flood, cyclone, Tsunami.
 Anthropogenic Disasters

Note: The above image are the (C)

catastrophic
2024_manimanishevents caused by Human Being.
 2019 2020 10 year average
(C) 2024_manimanish
Historical Catastrophes

(C) 2024_manimanish
 History of Insurance
Ancient Beginnings

1.Early Forms of Risk Sharing (3rd Millennium BCE):

1. China: Merchants practiced a form of risk management by distributing their goods across multiple vessels to minimize the loss from any
single shipwreck.
2. Babylon: The Code of Hammurabi (circa 1750 BCE) included provisions for a type of insurance where a merchant could receive a loan to
fund a shipment, and if the shipment was lost, the loan did not need to be repaid.

2.Ancient Greece and Rome:

The Greeks and Romans had mutual aid societies known as "benevolent societies" or "collegia" that provided financial assistance for burial
expenses and supported families of deceased members.

Medieval and Renaissance Periods

1.Maritime Insurance in the Middle Ages:

During the Middle Ages, maritime insurance became more formalized, particularly with the development of the "bottomry" contract. A
shipowner could take out a loan using the ship itself as collateral, and if the ship was lost, the loan did not need to be repaid.

1.Lloyd's of London (1688):

Lloyd's of London began as a coffee house where merchants, shipowners, and underwriters met to discuss and arrange insurance for shipping
ventures. It evolved into the world's leading insurance market, known for its innovative practices and comprehensive coverage.
(C) 2024_manimanish
Note:- Lloyd's of London (1688) began as a coffee house where merchants, shipowners, and underwriters met to discuss
and arrange insurance for shipping ventures. It evolved into the world's leading insurance market, known for its innovative
practices and comprehensive coverage.

(C) 2024_manimanish
Early Modern Period

1.The Great Fire of London (1666):

The devastation caused by the Great Fire of London led to the establishment of the first fire insurance company, the "Insurance Office for
Houses," founded by Nicholas Barbon in 1681.

2.Development of Life Insurance:

The first life insurance policies emerged in the 17th century. The Amicable Society for a Perpetual Assurance Office, established in 1706 in
London, is considered the first life insurance company.

18th and 19th Centuries

1.Growth of the Insurance Industry:

The 18th and 19th centuries saw significant growth and diversification in the insurance industry. Companies began offering various types of
insurance, including life, fire, marine, and later, accident insurance.

2. Establishment of Regulatory Frameworks:

As the industry grew, so did the need for regulation. Governments began to establish laws and regulatory bodies to oversee the operations of
insurance companies, ensuring their solvency and protecting policyholders.

(C) 2024_manimanish
20th Century and Beyond

1.Expansion of Insurance Types:

The 20th century saw the introduction of numerous new types of insurance, including health, automobile, and liability insurance. The rise of the
automobile industry, in particular, led to the widespread adoption of auto insurance.

2.Technological Advancements:

The advent of computers and the internet revolutionized the insurance industry. Insurers began using advanced data analytics, actuarial science,
and catastrophe modeling to assess and manage risk more effectively.

3.Globalization and Modernization:

The insurance industry became increasingly global, with multinational companies offering coverage worldwide. Innovations such as
microinsurance have also emerged to provide coverage to low-income populations in developing countries.

4.Impact of Disasters and Climate Change:

Natural and man-made disasters, along with the growing awareness of climate change, have shaped the modern insurance landscape. Insurers
now consider long-term climate risks and incorporate them into their models and strategies.

Note:- The history of insurance is marked by continuous innovation and adaptation to changing societal needs and risks. From its ancient origins
in risk-sharing practices to the sophisticated, data-driven industry of today, insurance has played a crucial role in providing financial security and
stability to individuals, businesses, and communities worldwide.
(C) 2024_manimanish
 1
What is Catastrophe
Modeling?

2
Benefits of
Catastrophe
Modeling

4
Choosing the Right
Catastrophe Model

3
Limitations and
(C) 2024_manimanish Challenges
 Cat Modeling

What is Catastrophe Modeling?

Catastrophe modeling, often abbreviated as cat modeling, is a technique used in the insurance industry to assess and manage
the risks associated with catastrophic events such as natural disasters.
These models help insurers estimate the potential impact of such events on their portfolios and understand the financial
implications of large-scale losses.

Here’s a detailed explanation of cat modeling and its importance in insurance:

❖ Catastrophe modeling involves the use of mathematical and statistical tools to simulate the occurrence of catastrophic
events and predict their potential impact on insurance portfolios.
❖ The models incorporate data on historical events, geographic factors, building characteristics, and other relevant variables
to estimate the financial consequences of such events.

(C) 2024_manimanish
Components of Catastrophe Modeling
1.Hazard Models: These models assess the likelihood and severity of
a catastrophic event occurring in a specific area. Example: A hurricane
hazard model predicts the intensity and frequency of hurricanes based
on historical data and meteorological patterns.

2.Exposure Models: These models evaluate the assets and

properties exposed to the hazard, including their value and
vulnerability. Example: An exposure model might analyze the number
01 and value of homes in a flood-prone area.

02 3.Vulnerability Models: These models estimate the extent of

damage that a specific hazard will cause to various types of properties
03 or structures. Example: A vulnerability model assesses how different
building materials and construction types affect damage from an
earthquake.
04
4.Loss Models: These models aggregate the potential losses from the
hazard and exposure models to estimate the financial impact on an
insurer’s portfolio.Example: A loss model calculates the expected
payout for an insurer based on the estimated damage to insured
(C) 2024_manimanish
properties.
 Scenario
Capital
Analysis Regulatory
Management
Compliance
04
Pricing and 03 05
Underwriting
Reinsurance
02 Purchasing
06
Risk
Assessment Strategic
Planning
01
07

Importance of Catastrophe Modeling in Insurance

(C) 2024_manimanish
 Importance of Catastrophe Modeling in Insurance

1.Risk Assessment: Cat modeling helps insurers understand the potential frequency and severity of catastrophic
events, allowing them to assess their exposure to risk more accurately. Example: By evaluating the risk of hurricanes
in coastal regions, insurers can better gauge the potential impact on their policies.

2.Pricing and Underwriting: Accurate catastrophe models enable insurers to set appropriate premiums based on
the level of risk associated with different locations and properties.
Example: Insurance premiums for properties in high-risk areas, such as flood zones, can be adjusted to reflect the
higher likelihood of claims.

3.Capital Management: Catastrophe modeling helps insurers determine the amount of capital needed to cover
potential losses from catastrophic events, ensuring financial stability and solvency. Example: Insurers can use model
outputs to set aside reserves or purchase reinsurance to manage potential large-scale losses.

4.Scenario Analysis: Models allow insurers to simulate various catastrophic scenarios and assess their potential
impact on the portfolio..
Example: Insurers can evaluate the financial impact of a severe earthquake in a major city and plan for potential
scenarios accordingly.

(C) 2024_manimanish
 Importance of Catastrophe Modeling in Insurance
5.Regulatory Compliance: Many regulatory frameworks require insurers to use catastrophe modeling to demonstrate
their ability to handle catastrophic risks and maintain adequate reserves. Example: Regulatory bodies may require insurers to
submit detailed risk assessments and catastrophe modeling results as part of their compliance requirements .

6.Strategic Planning: Cat modeling supports strategic decision-making by providing insights into risk concentrations,
potential losses, and opportunities for diversification. Example: Insurers might use modeling results to decide whether to
enter or exit specific markets based on their risk profile.

7.Reinsurance Purchasing: Catastrophe models inform the purchasing of reinsurance by estimating potential losses and
determining appropriate coverage levels. Example: Insurers can negotiate reinsurance contracts based on modeled
estimates of catastrophic loss exposure.

8.Communication with Stakeholders: Cat modeling results can be used to communicate risk exposure and management
strategies to stakeholders, including investors, regulators, and customers . Example: Detailed model outputs can help
insurers explain their risk management practices and financial stability to shareholders.

Note:- Catastrophe modeling is a critical tool in the insurance industry, providing essential insights into the risks and
potential financial impacts of catastrophic events. By leveraging advanced modeling techniques, insurers can better manage
risk, set appropriate premiums, ensure regulatory compliance, and make informed strategic decisions. This ultimately helps
them maintain financial stability and provide reliable coverage to their policyholders.
(C) 2024_manimanish
 Various Type of Account
The various type of account like quote, bound endorsement , binder with their importance and example in cat
modeling:
In the context of insurance and catastrophe (cat) modeling, various types of accounts and documentation play critical roles in
managing coverage, assessing risk, and handling policies. Here’s an explanation of some key terms such as quote, bound
endorsement, and binder, along with their importance and examples in the context of cat modeling:

1.Quote
A quote is an estimate of the premium and terms offered by an insurance company for a particular policy. It is based on the
information provided by the prospective policyholder, including details about the risk exposure.

Importance of Quote Account:

a. Risk Assessment: A quote helps the insurer assess the risk and determine an appropriate premium based on the potential
exposure to catastrophic events.

b. Decision-Making: It allows potential clients to compare different insurance options and select coverage that fits their needs
and budget. Example in Cat Modeling: Scenario: A company seeking flood insurance for a property in a flood-prone area requests
a quote.

c. Application: The insurer uses catastrophe models to estimate the risk of flooding in that area, considering historical flood data,
exposure, and vulnerability. The quote provided reflects the calculated risk and potential financial impact of a major flood.
(C) 2024_manimanish
 2. Bound Endorsement
A bound endorsement is an official document that modifies or updates the terms of an existing insurance policy. It
reflects changes agreed upon after the policy has been initially issued and is typically used to add or adjust coverage.

Importance of Bound Endorsement:

a. Policy Flexibility: It allows for adjustments to the policy to accommodate changes in risk exposure or coverage
needs.

b. Coverage Accuracy: Ensures that the insurance policy accurately reflects the current risk environment and insured
values.
Example in Cat Modeling Scenario: An insurer initially issued a policy with coverage for earthquake damage based on
standard seismic data. Later, the insured property undergoes significant renovations, increasing its value and changing
its exposure.

c. Application: A bound endorsement is issued to update the policy terms and coverage limits, incorporating new
information from updated earthquake hazard models to ensure adequate protection against potential seismic events.

(C) 2024_manimanish
 3. Binder
A binder is a temporary insurance contract that provides immediate coverage until the formal policy is issued. It outlines
the terms and conditions of coverage during the interim period.

Importance of Binder:
a. Immediate Coverage: Provides temporary protection while the final policy is being processed, ensuring that
coverage is in place without delay.

b. Risk Management: Allows insurers to begin assessing and managing risk immediately, even before the final policy
details are finalized. Example in Cat Modeling Scenario: An insurer is preparing to issue a new policy for a commercial
property located in a high-risk hurricane zone. The policyholder needs immediate coverage to protect against an
approaching storm.

c. Application: The insurer issues a binder that includes preliminary terms and coverage limits based on the current
hurricane hazard models. This temporary coverage ensures that the property is protected against potential hurricane
damage while the final policy is being prepared.

(C) 2024_manimanish
 Understanding different terms in Cat Modeling
In the context of insurance and catastrophe (cat) modeling, understanding terms like limit, sublimit, deductible, Self-
Insured Retention (SIR), and attachment point is crucial for assessing coverage and managing risk.

1.Limit
The maximum amount an insurance policy will pay for a covered loss or claim. Once the loss exceeds this amount, the
policyholder is responsible for any additional costs.

Importance of Limit:
a. Coverage Cap: It sets the upper boundary of coverage provided by the insurance policy.

b. Risk Management: Helps insurers manage their exposure to large losses by defining the maximum payout . Example in
Cat Modeling Scenario: An insurer offers coverage for hurricane damage to a coastal property with a policy limit of $10
million.

Application of Limit:
❖ If a hurricane causes $15 million in damage, the insurer will only pay up to the policy limit of $10 million. The remaining
$5 million would be the responsibility of the policyholder.
(C) 2024_manimanish
 2. Sublimit
A sublimit is a limit within the overall policy limit that applies to specific types of coverage or perils.
Importance of Sublimit:
a. Specific Coverage: Allows insurers to provide detailed coverage for particular risks without raising the overall policy limit.
b. Risk Allocation: Helps manage and allocate risk more precisely for different types of losses. Example in Cat Modeling
Scenario: The same policy with a $10 million limit might have a $1 million sublimit for flood damage.
Application of Sublimit:
❖ If a hurricane causes significant flooding and the damage is $1.5 million, the insurer will only cover up to the sublimit of $1
million for flood damage, even though the overall policy limit is $10 million.

3. Deductible
The amount the policyholder must pay out-of-pocket before the insurance coverage starts to pay for a claim.
Importance of Deductible:
a. Cost Sharing: Reduces the insurer’s exposure to small or frequent claims and encourages policyholders to manage their risk.
b. Premium Impact: Higher deductibles typically result in lower premiums, while lower deductibles increase premiums.
Example in Cat Modeling Scenario: A hurricane insurance policy has a $500,000 deductible.
Application of Deductible:
❖ If a hurricane causes $2 million in damage, the policyholder must pay the first $500,000 of the loss. The insurer will cover the
remaining $1.5 million.
(C) 2024_manimanish
 4.Self-Insured Retention (SIR)
The amount of loss the policyholder retains and must cover before the insurance company begins to pay. It is similar to a
deductible but often used in larger, more complex policies.
Importance of Self-Insured Retention(SIR):
Risk Retention: Allows organizations to retain a portion of the risk and reduce insurance costs.Coverage Activation: The insurer
only starts covering losses once the SIR is met. Example in Cat Modeling Scenario: A company has a $1 million SIR on its hurricane
insurance policy.
Application of Self-Insured Retention:
❖ If a hurricane causes $3 million in damage, the company must pay the first $1 million (SIR). The insurer will cover the
remaining $2 million, provided it’s within the policy limits.
5. Attachment
The attachment point is the level of loss at which an excess insurance policy or reinsurance coverage begins to pay. It represents
the point where the primary insurance coverage ends, and excess or reinsurance coverage starts.
Importance of Attachment:
a. Coverage Layering: Helps manage large-scale risks by layering coverage, with primary insurance covering lower levels of loss
and excess or reinsurance covering higher levels.
b. Financial Planning: Assists in structuring insurance programs to handle catastrophic events. Example in Cat Modeling
Scenario: An insurer has primary coverage up to $10 million with an attachment point of $10 million for excess coverage.
Application of Attachment:
❖ For a hurricane causing $15 million in damage, the primary insurance covers the first $10 million. The excess insurance kicks in
at the attachment point of $10 million, covering the additional $5 million in damages.
(C) 2024_manimanish
 REINSURERS

Dividends Issuing

SHARE-HOLDERS Reinsurance Premiums CAT BONDS

INSURERS

Insurance Premiums Payments

CUSTOMERS
(C) 2024_manimanish
 PREMIUM
Introduction:
Premium is the amount of money paid by a policyholder to an insurance company in exchange for coverage against specified
risks. It is a fundamental aspect of any insurance policy and serves several key purposes.

Definition: The premium is the cost of purchasing an insurance policy, paid either as a lump sum or in installments (e.g.,
monthly, quarterly, or annually). It compensates the insurer for taking on the risk associated with providing coverage.

Importance of Premium:
a. Revenue Generation: Premiums are the primary source of revenue for insurance companies. They use this revenue to
cover claims, operating expenses, and to generate profit.
b. Risk Management: Premiums reflect the risk level associated with the policyholder. Higher premiums are charged for
higher risk profiles, ensuring that the insurer has sufficient funds to cover potential claims.
c. Financial Stability: Premiums help insurers build reserves and maintain financial stability, allowing them to handle large
claims, especially during catastrophic events.
d. Coverage Affordability: Premiums enable policyholders to access financial protection against risks without bearing the
full cost of potential losses.
e. Regulatory Compliance: Insurance companies use premiums to meet regulatory requirements, such as maintaining
adequate reserves and capital levels.

(C) 2024_manimanish
 Types of Premiums
1.Fixed Premium: A fixed premium is a set amount that does not change throughout the policy term.

Importance of Fixed Premium:

a. Predictability: Provides policyholders with stable, predictable costs for the duration of the policy.
b. Budgeting: Helps in financial planning and budgeting.
Example: An annual auto insurance policy with a fixed premium of $1,200. The policyholder pays $1,200 each
year, regardless of changes in risk or claims.

2.Variable Premium: A variable premium can change based on certain factors, such as the insurer’s
financial performance, changes in risk, or adjustments in coverage.

Importance of Variable Premium:

a. Flexibility: Reflects changing risk levels or market conditions.
b. Adjustments: Allows for adjustments in coverage or cost based on policyholder’s changing circumstances.

Example: A life insurance policy with a variable premium where the amount can increase or decrease based on
the performance of investment components in the policy.
(C) 2024_manimanish
3.Proportional Premium: This type of premium is calculated based on a proportion of the coverage amount and
the risk level. It is common in certain types of commercial and specialty insurance.

Importance of Proportional Premium:

Risk Alignment: Aligns the premium with the level of coverage and risk exposure.
Example: In commercial property insurance, a premium might be set as a percentage of the insured value of the property. For a
$5 million property with a 0.2% rate, the premium would be $10,000.

4.Non-Proportional Premium: Premiums for non-proportional insurance coverages are set for excess insurance
or reinsurance, where the insurer only pays for losses exceeding a certain threshold.

Importance of Non-Proportional Premium:

Excess Coverage: Provides coverage for losses above a predefined limit, often used in reinsurance.
Example: An excess-of-loss reinsurance policy might have a premium based on the excess coverage provided above a $10 million
threshold, covering losses from $10 million to $20 million.

5. Flexible Premium: Flexible premiums allow policyholders to adjust the amount and frequency of payments within
certain limits.
Importance of Flexible Premium:
Customization: Provides flexibility to meet changing financial situations or needs.
Example: In a flexible life insurance policy, the policyholder can choose to increase or decrease premium payments based on
their financial situation and coverage needs . (C) 2024_manimanish
6. Single Premium: A single premium is a one-time payment made at the beginning of the policy term, rather than
periodic payments.

Importance of Single Premium:

Immediate Coverage: Provides full coverage from the start of the policy with a lump-sum payment.
Example: A single premium annuity requires a one-time payment to fund the annuity, which then provides regular income
payments for a specified period or for life.

7. Participating Premium: A participating premium is one where policyholders may receive dividends or a share of the
insurer’s profits based on the performance of the insurance company.

Importance of Participating Premium:

Profit Sharing: Offers potential additional benefits or refunds to policyholders.
Example: A participating life insurance policy might have a premium that, based on the insurer’s performance, could result in
dividends paid to the policyholder, reducing the overall cost of coverage.

8. Non-Participating Premium: A non-participating premium does not provide any dividends or share of the
insurer’s profits to the policyholder.
Importance of Non-Participating Premium:
Predictability: Premiums are fixed and do not vary based on the insurer’s financial performance.
Example: A non-participating whole life insurance policy where the premium remains constant throughout the policy term,
without any possibility of receiving dividends. (C) 2024_manimanish
 Gross Premium
Definition:
Gross premium is the total amount charged by an insurance company to a policyholder for providing coverage. This amount is
calculated before any deductions, such as commissions, administrative fees, or reinsurance costs. It represents the
comprehensive cost of the insurance policy.

Importance of Gross Premium

1.Revenue Generation: Gross premiums are a primary source of revenue for insurance companies. They are crucial for the
financial health and stability of the insurer.

2.Risk Management: The gross premium includes the cost of covering potential claims. It helps insurers manage and pool risks
effectively.

3.Expense Coverage: This premium amount also covers the administrative and operational costs of the insurance company.

4. Profit Margin: It includes a profit margin that allows insurers to reinvest in the business and ensure long-term sustainability.

5.Regulatory Compliance: Insurers must maintain certain premium levels to meet regulatory requirements and ensure they have
enough funds to pay out claims.

(C) 2024_manimanish
Example
Let's consider an example to illustrate the concept and importance of gross premium:

Example Scenario:
Insurance Policy: Auto insurance policy
Policyholder: Sandeep
Gross Premium Amount: $1,200 annually

Breakdown of Gross Premium:

1.Risk Coverage: $800

2.Administrative Expenses: $200
3.Agent Commissions: $100
4. Profit Margin: $100

(C) 2024_manimanish
Importance in this Scenario:
❑ Revenue for the Insurer: The $1,200 gross premium contributes to the insurer's revenue, enabling it to operate and cover
claims.
❑ Risk Management: The $800 allocated for risk coverage ensures that the insurer can pay for any claims Sandeep might
make during the policy period.
❑ Operational Sustainability: The $200 for administrative expenses helps the insurer manage its day-to-day operations, such
as customer service, policy processing, and claim handling.
❑ Incentivizing Sales: The $100 for agent commissions encourages agents to sell more policies, thereby expanding the
insurer's customer base.
❑ Ensuring Profitability: The $100 profit margin allows the insurer to remain profitable, reinvest in its business, and maintain
financial stability.

In summary, the gross premium is a crucial element in the insurance industry, ensuring that insurers can cover risks, manage
expenses, incentivize sales, and remain profitable while providing necessary coverage to policyholders.

(C) 2024_manimanish
 Premium Calculation
Q. How do we calculate the premium while insuring a property damage of any building at any location caused due to natural
catastrophic event like flood ,earthquake , hailstone etc after applying limit ,sublimit, deductible SIR and attachment point in
cat modeling.
Steps involved while calculation
1. Assess the Property and Location Risk: Evaluate the building's characteristics (construction type, age, occupancy, value)
and location (proximity to fault lines, flood zones, etc.).
2. Determine the Exposure: Calculate the value of the property and the potential maximum loss due to different
catastrophes.
3.Use Catastrophe Models: Input data into catastrophe models which simulate various natural disaster scenarios and
estimate potential losses.

Apply Limits, Sublimits, Deductibles, SIR, and Attachment Points:

3.a. Limit: The maximum amount the insurer will pay.
3.b. Sublimit: A specific limit within the main limit for particular types of loss (e.g., flood damage).
3.c. Deductible: The amount the policyholder must pay before the insurance kicks in.
3.d. Self-Insured Retention (SIR): Similar to a deductible, but the policyholder handles the initial loss.
3.e Attachment Point: The threshold above which the insurer starts paying losses.
3.f. Calculate the Premium: The premium is based on the potential loss, adjusted for limits, sublimits, deductibles,
SIR, and attachment points. (C) 2024_manimanish
 Example for Premium Calculation
Let's consider an example:
Property Value: $10,000,000

Catastrophe Type: Earthquake

Limit: $8,000,000
Sublimit for Earthquake: $5,000,000
Deductible: $500,000
SIR: $1,000,000
Attachment Point: $2,000,000
Steps:
Model Potential Loss: Assume the catastrophe model predicts a potential loss of $7,000,000 for a significant earthquake.
1.Apply Limits: The limit is $8,000,000, which covers the total predicted loss of $7,000,000.
2.Apply Sublimit: The sublimit for earthquake is $5,000,000, meaning only $5,000,000 of the $7,000,000 loss is covered.
3.Apply Deductible : Deductible: $500,000 is subtracted from the covered amount.
4.Apply SIR: SIR of $1,000,000 is also subtracted before the insurer pays.
5.Calculate Insurer's Payment: Total covered loss (limited by sublimit): $5,000,000
6.After Deductible: $5,000,000 - $500,000 = $4,500,000
7.After SIR: $4,500,000 - $1,000,000 = $3,500,000
8.Premium Calculation: Base rate determined by the insurer for earthquake coverage might be, say, 0.2% of the insured value.
9.Premium before adjustments: $10,000,000 * 0.002 = $20,000
*Adjust for the deductible, SIR, and sublimits (insurers use actuarial methods to factor these into the rate).*
:-Final premium calculation involves complex actuarial methods, incorporating the probability of loss, the financial structure of the policy, and market conditions.
1. Simplified Premium Example: Base Premium: $20,000
2. Adjust for Deductible: Typically lowers premium (e.g., -$1,000)
3.Adjust for SIR: Also lowers premium (e.g., -$2,000)
4.Adjust for Sublimits: May lower premium (e.g., -$500)Final Premium: $20,000 - $1,000 - $2,000 - $500 = $16,500

(C) 2024_manimanish
Note:-This simplified example illustrates the basic principles, but actual premium calculations involve detailed risk assessments and actuarial science.
 Actual Premium Calculation
The actual premium calculation for insuring a property against catastrophic events involves several actuarial steps and detailed
risk assessments. Here’s a more comprehensive breakdown with mathematical calculations:

Steps to Calculate Premium

1.Determine the Exposure Value
2.Estimate the Annual Expected Loss (AEL)
3.Adjust for Limit, Sublimit, Deductible, SIR, and Attachment Point
4.Apply Loadings and Factors
5.Final Premium Calculation

Example:

Step 1: Determine the Exposure Value ; Let Property Value (V) be : $10,000,000

Step 2: Estimate the Annual Expected Loss (AEL)

Use catastrophe models to estimate the expected annual loss.
Assume the model provides the following :
AEL for Earthquake (AEL_eq): 0.1% of property value
AEL_eq = 0.001 * $10,000,000 = $10,000

(C) 2024_manimanish
Step 3: Adjust for Limits, Sublimits, Deductibles, SIR, and Attachment Points Limit (L):
*Let
Sublimit for Earthquake (SL_eq)= $8,000,000
Deductible (D)= $5,000,000
Self-Insured Retention (SIR)= $500,000
Attachment Point (AP)= $1,000,000
Adjusted Loss Calculation = $2,000,000
Apply Deductible and SIR :
Initial Adjusted Loss = AEL_eq - D – SIR If AEL_eq < D + SIR, the insurer pays nothing.

Otherwise: Initial Adjusted Loss = $10,000 - $500,000 - $1,000,000 = -$1,490,000 (Since the initial loss is less than the deductible
and SIR, insurer pays nothing on this basis).

Apply Sublimit and Limit: Since the sublimit for earthquake ($5,000,000) is lower than the overall limit ($8,000,000), we use the
sublimit.
Adjusted for Sublimit: If the loss is within the sublimit range then
Loss capped at SL_eq. Adjusted Loss = Min(SL_eq, Max(AEL_eq - D, 0)) Adjusted Loss = Min($5,000,000, Max($10,000 - $500,000,
0)) = $0 (since $10,000 - $500,000 is negative).

(C) 2024_manimanish
Apply Attachment Point:

If the adjusted loss (after applying deductible and SIR) is less than the attachment point, the insurer pays nothing.
Adjusted Loss = Max(Adjusted Loss - AP, 0) = Max($0 - $2,000,000, 0) = $0
Final Adjusted Loss In this case, the expected loss to the insurer is zero due to the high deductible, SIR, and attachment point relative to the small
AEL.
For illustration, let's assume a more significant expected loss scenario.

Step 4: Apply Loadings and Factors Loadings: Include expenses, profit margin, reinsurance costs, and contingencies.

Expense Loading (EL): 15% of AEL Profit Margin (PM): 10% of AEL Reinsurance Cost (RC): 5% of AEL Contingency Factor (CF):

2% of AEL Total Loadings (TL) = EL + PM + RC + CFTL = 0.15 * $10,000 + 0.10 * $10,000 + 0.05 * $10,000 + 0.02 * $10,000TL = $1,500 + $1,000 +
$500 + $200 = $3,200

Adjusted Premium = AEL_eq + TL = $10,000 + $3,200 = $13,200

Step 5: Final Premium Calculation Apply market rate adjustments and any additional underwriting considerations.

Let's assume an additional market adjustment factor of 1.2 to account for competitive market rates.
Final Premium (FP) = Adjusted Premium * Market Adjustment Factor FP = $13,200 * 1.2 = $15,840.

(C) 2024_manimanish
 Example with a Graph
Policy_coverage Location 1 Location 2 Location 3 Location 4 Location 5
TIV 10,000,000 3,500,000 45,000,000 80,000,000 85,000,000
Limit 9,000,000 1,000,000 4,000,000 10,000,000 85,000,000
peril EQ Flood Cyclone Fire EQ
sublimit 500,000 300,000 600,000
deductibles 20,000 20,000 20,000 20,000 20,000

Coverage by insurer 480,000 680,000 3,980,000 580,000 84,980,000

Policy

90000000 85000000
85000000
80000000 80000000
70000000 84980000
60000000
TIV

45000000
50000000 10000000 0
0
40000000 0 20000
30000000 4000000 600000
3500000 0 20000
20000000 0 580000
1000000
10000000 10000000 0 20000
9000000 3980000
300000
0
0 20000
TIV
500000 680000
Limit
peril 20000
sublimit 480000
deductibles
Location 1 (C) 22024_manimanish
Location Location 3 Location 4 Location 5 Coverage by insurer
The steps followed in CAT Modeling regarding any account

1.Data Collection
❖ Property Data Location: Address, latitude/longitude
❖ Construction Details: Building materials, construction type
❖ Primary modifiers like Year built, Stories, Fire sprinklers etc.
❖ Seccondary modifiers like roof cover/deck/anchorage, wall type/ sliding, Foundation type/connection. Pounding,
building condition, retrofit, ornamentation, soft story, short column etc.
❖ Occupancy: Residential, commercial, industrial, etc.
❖ Financial Values: Replacement cost, actual cash value, contents value
❖ Exposure Data Policy Details: Limits, sublimits, deductibles, attachment points, self-insured retention
❖ Historical Loss Data: Past claims and losses associated with the property

2. Hazard Assessment

❖ Identify Hazards Natural Hazards: Earthquake, flood, hurricane, hailstorm, etc.

❖ Geographic Factors: Proximity to fault lines, flood zones, coastal areas.
❖ Hazard Intensity and Frequency Historical Data Analysis: Past event data to understand frequency and severity
Scientific Research: Geological, meteorological, and hydrological studies

(C) 2024_manimanish
1. Construction Type: Modifier value of 0.8, indicating a reduction in risk.
2. Occupancy: Modifier value of 1.2, indicating an increase in risk.
3. Story Count: Modifier value of 1.5, indicating a higher risk due to more stories.
4. Year Built: Modifier value of 0.9, indicating a slight reduction in risk for newer buildings.

(C) 2024_manimanish
(C) 2024_manimanish
3. Vulnerability Assessment
❖ Building Vulnerability Structural Integrity: Resistance to specific hazards.
❖ Contents Vulnerability: Susceptibility of building contents to damage
❖ Occupancy Vulnerability Occupancy Type: Different occupancies have different risk profiles

4. Model Selection and Configuration

❖ Select Appropriate Catastrophe Model Vendor Models: RMS, AIR Worldwide, CoreLogic, etc. Custom Models: In-house
models developed by insurers.
❖ Configure Model Parameters Model Settings: Tailor model to specific requirements (e.g., geographic scope, hazard
type)Exposure Data Input: Enter the collected property and exposure data into the model

5. Loss Estimation

❖ Simulate Catastrophic Events Scenario Analysis: Run simulations of various catastrophic events. Stochastic Modeling: Use
probabilistic methods to simulate a wide range of potential events
❖ Estimate Losses:
a. Gross Losses: Total estimated losses before policy conditions.
b. Net Losses: Losses after applying limits, sublimits, deductibles, attachment points, and SIR.

(C) 2024_manimanish
6. Financial Analysis
❖ Apply Financial Terms Policy Conditions: Limits, sublimits, deductibles, attachment points, SIR Reinsurance: Account for
reinsurance treaties and recoveries.
❖ Calculate Expected Losses and Probable Maximum Loss (PML)Average Annual Loss (AAL): Expected annual loss over a long
period PML: The maximum loss expected over a specified period (e.g., 1-in-100 year event)

7. Risk Management and Mitigation

❖ Identify High-Risk Areas Risk Concentration: Identify areas with high exposure to specific hazards
❖ Recommend Mitigation Strategies Engineering Solutions: Strengthen building structures, improve flood defenses
Underwriting Adjustments: Modify policy terms, adjust premiums.

8. Reporting and Documentation

❖ Generate Reports Loss Estimates: Detailed loss estimates and breakdowns Risk Profiles: Vulnerability and hazard
assessments
❖ Documentation Model Assumptions and Limitations: Document the assumptions and limitations of the model used
Decision Rationale: Justify the decisions based on model results and risk assessment.

(C) 2024_manimanish
 How CAT Models Work

Where to happen?
At which intensity?
How Often?

Hazard To which damage degree? How high is the loss?

4 Modules Vulnerability Loss

Value
Distribution

Where the risks are?

(C) 2024_manimanish
 How CAT Models Work

Hazard: Stochastic events are simulated Vulnerability: This is the amount of

against exposures. Each event has an damage expected to result from an
associated probability. event based on the exposure
characteristics and event intensity.

Exposures: Models start with the

exposure distribution (geography, Financial Perspectives: Finally,
construction, occupancy, etc.) varying perspectives of the loss are
generated (application of primary
insurance conditions and facultative and
treaty reinsurance).

(C) 2024_manimanish
Example
Walkthrough

Property Details: Location: Miami, FL

Construction: Masonry, built in 1990
Occupancy: Commercial Value : $15,000,000
Policy: Limit = $10,000,000, Deductible= $500,000, Sublimit for hurricane = $5,000,000

Hazard Assessment:

Hazard: Hurricane
Historical Data: Frequency and severity of hurricanes in Miami
Scientific Data: Meteorological studies on hurricane patterns.

Vulnerability Assessment:

Structural Vulnerability: Moderate due to masonry construction.

Contents Vulnerability: High due to valuable commercial contents.

(C) 2024_manimanish
Model Configuration :

Model: AIR Worldwide Parameters: Miami, FL, hurricane hazard, commercial occupancy.
Loss Estimation:
Simulate Events: Run hurricane scenarios
Estimate Gross Loss: $7,000,000
Net Loss: After deductible ($500,000) and sublimit ($5,000,000) applied

Financial Analysis:

AAL: Calculated to be $50,000 PML: 1-in-100 year event estimated at $8,000,000

Risk Management: Identify High Risk ( High hurricane exposure in Miami ).
Mitigation: Recommend storm shutters, increase deductible to manage risk.
Reporting: Generate Report: Detailed loss estimates, AAL, PML Document: Assumptions, model limitations, risk management
strategies.

Note:- By following these steps, insurers can effectively assess and manage the risk of catastrophic events, ensuring
appropriate pricing and risk mitigation strategies.

(C) 2024_manimanish
(C) 2024_manimanish
 CAT Modeling History
The origins of catastrophe (cat) modeling can be traced back to the development of the insurance industry and the
need to assess and manage risks associated with large-scale disasters. The history of cat modeling involves several
key milestones and pioneering efforts:

Early Developments in Risk Assessment

1.17th Century Insurance Practices:
❑ The first organized insurance practices began in the 17th century, particularly in the maritime industry.
Merchants and shipowners sought to protect themselves from the financial losses associated with
shipwrecks, piracy, and other maritime perils.
❑ The Great Fire of London in 1666, which destroyed a significant portion of the city, underscored the need
for structured risk assessment and led to the creation of the first fire insurance company.

2. 18th and 19th Century Statistical Methods:

❑ The development of probability theory and statistics during the 18th and 19th centuries laid the
groundwork for more sophisticated risk assessment methods. These methods allowed insurers to better
understand and quantify the likelihood and impact of various risks.

(C) 2024_manimanish
 CAT Modeling History
Birth of Catastrophe Modeling
1.Technological Advancements in the Mid-20th Century:
❑ The advent of computers in the mid-20th century revolutionized the field of risk assessment. Computers
enabled more complex calculations and simulations, which were crucial for developing models capable of
handling vast amounts of data and numerous variables.

2.Pioneering Efforts in the Late 20th Century:

❑ The late 1980s and early 1990s marked the beginning of modern catastrophe modeling. Several key figures
and companies were instrumental in this development:
❖ Karen Clark: Often credited as the pioneer of catastrophe modeling, Karen Clark founded Applied
Insurance Research (AIR) in 1987. She developed the first commercially available hurricane model, which
used computer simulations to estimate potential losses from hurricanes.
❖ RMS (Risk Management Solutions): Founded in 1988, RMS quickly became a leader in the field of cat
modeling. The company developed models for various natural disasters, including earthquakes,
hurricanes, and floods.
❖ EQECAT: Established in 1994, EQECAT focused on creating models for earthquake risk assessment and
later to other perils.
(C) 2024_manimanish
 Recent Trends and Future Directions
1.Incorporating Climate Change:
❖ As climate change affects the frequency and severity of natural disasters, catastrophe models are evolving to
incorporate climate projections and scenarios. This is crucial for the insurance industry to manage future risks and
maintain financial stability.

2.Expansion to Man-Made Risks:

❖ Initially focused on natural disasters, cat modeling now includes man-made risks such as terrorism, cyber attacks, and
pandemics. This expansion requires integrating new types of data and developing specialized models for these perils.

3.Regulatory and Market Impact:

❖ Regulatory bodies in various countries are increasingly relying on catastrophe models for setting solvency
requirements and assessing the financial health of insurers. Cat modeling is also used by governments and
organizations for disaster preparedness and mitigation planning.

Note: Catastrophe modeling has come a long way since its inception, driven by continuous advancements in technology,
data integration, and risk understanding. Pioneers like Karen Clark and companies such as AIR, RMS, and EQECAT have played
a crucial role in shaping this field, making it an indispensable tool for managing and mitigating the financial impacts of
disasters.

(C) 2024_manimanish
 Python code to draw the graph
import matplotlib.pyplot as plt
import numpy as np

# Example dataset
np.random.seed(0) # For reproducibility
buildings = [f'Building {i}' for i in range(1, 6)]
construction_types = ['Concrete', 'Steel', 'Wood', 'Brick', 'Concrete']
occupancy_types = ['Residential', 'Commercial', 'Industrial', 'Mixed', 'Residential']
years_built = np.random.randint(1990, 2024, size=5)
stories = np.random.randint(1, 15, size=5)
tiv = np.random.randint(1, 100, size=5) # Total Investment Value

# Define colors for construction and occupancy types

construction_colors = {
'Concrete': 'grey',
'Steel': 'blue',
'Wood': 'brown',
'Brick': 'red'
}

occupancy_colors = {
'Residential': 'lightblue',
'Commercial': 'lightgreen',
'Industrial': 'lightyellow',
'Mixed': 'lightcoral' (C) 2024_manimanish
}
# Set up the bar width and position
bar_width = 0.2
index = np.arange(len(buildings))

# Create the plot

fig, ax = plt.subplots(figsize=(14, 8))

# Bar for Year Built

bars1 = ax.bar(index - 1.5*bar_width, years_built, bar_width, label='Year Built', color='skyblue')

# Bar for Stories

bars2 = ax.bar(index - 0.5*bar_width, stories, bar_width, label='Stories', color='orange')

# Bar for Total Investment Value (TIV)

bars3 = ax.bar(index + 0.5*bar_width, tiv, bar_width, label='Total Investment Value (TIV)', color='purple')

# Plot Construction and Occupancy Types

for i in range(len(buildings)):
ax.text(index[i] - 1.5*bar_width, years_built[i] + 0.5, str(years_built[i]), ha='center', va='bottom')
ax.text(index[i] - 0.5*bar_width, stories[i] + 0.5, str(stories[i]), ha='center', va='bottom')
ax.text(index[i] + 0.5*bar_width, tiv[i] + 0.5, str(tiv[i]), ha='center', va='bottom')

# Adding text for construction and occupancy types

ax.text(index[i], 0.5, construction_types[i], ha='center', va='bottom', color=construction_colors[construction_types[i]])
ax.text(index[i], 0.5, occupancy_types[i], ha='center', va='bottom', color=occupancy_colors[occupancy_types[i]], fontsize=8)

# Add labels and title

ax.set_xlabel('Buildings')
ax.set_ylabel('Value')
ax.set_title('Building Data Visualization with Construction and Occupancy Types')
ax.set_xticks(index)
ax.set_xticklabels(buildings, rotation=45)

# Add legend
ax.legend()

# Display the plot

plt.tight_layout()
plt.show() (C) 2024_manimanish