Specifying the Properties of the Insurance Policy

The "Definition" portion of the Insurance dialog is used to specify the properties of the insurance policy:

The key properties of the policy are the Deductible and the Cap.

The Deductible is the cumulative amount of claims that the insured is responsible for before coverage starts (from the insurer's point of view, the lower loss limit). The Cap is the maximum amount payable to the insured from the insurer until the value is reset (from the insurer's point of view, the upper loss limit). Both of these inputs have units of currency. The Deductible must be a non-negative values. The Cap, however, can be also be negative. If it is negative, the Cap is ignored (there is no cap on coverage). If it is zero, all claims are rejected.

Note: To simulate an expiring policy, set the Cap to zero.

The Reset Deductible and Cap drop-list determines when these values are reset. There are four options:

• "For each claim". The Deductible and Cap are reset prior to processing a claim. That is, this option is used for policies in which each event has the full deductible and cap applied.

• "Annually". The Deductible and Cap are reset once per year (with the first reset occurring at one year after the Insurance element is activated, which, by default, is the start of the simulation). GoldSim automatically interrupts the clock (i.e., adds a timestep) once per year. This ensures that Caps and Deductibles are reset annually regardless of the model timestep.

• "Never". The Deductible and Cap are never reset.

• "When triggered". The Deductible and Cap are reset by a user-specified trigger. If this option is selected, the Trigger… button to the right of the input field becomes available:

Pressing this button brings up the standard GoldSim triggering dialog:

This dialog allows you to specify conditions or events that will result in Deductible and Cap being reset.

The Deductible and Cap can be specified as functions of time, but are only applied at the start of each realization, and when these limits are reset (as described above).