Sule Sahin - Academia.edu (original) (raw)

Papers by Sule Sahin

medRxiv (Cold Spring Harbor Laboratory), Sep 23, 2020

The crisis caused by COVID-19 revealed the global unpreparedness for handling the impact of a pan... more The crisis caused by COVID-19 revealed the global unpreparedness for handling the impact of a pandemic. In this paper, we present a first quarter chronicle of COVID-19 in Hubei China, Italy and Spain, specifically their infection speed, death and fatality rates. By fitting distributions to these rates, we look for the effectiveness of government measures during the pandemic through a number of statistical approaches.

arXiv (Cornell University), Dec 24, 2019

In this paper, we propose a stochastic investment model for actuarial use in South Africa by mode... more In this paper, we propose a stochastic investment model for actuarial use in South Africa by modelling price inflation rates, share dividends, long term and short-term interest rates for the period 1960-2018 and inflation-linked bonds for the period 2000-2018. Possible bi-directional relations between the economic series have been considered, the parameters and their confidence intervals have been estimated recursively to examine their stability and the model validation has been tested. The model is designed to provide long-term forecasts that should find application in long-term modelling for institutions such as pension funds and life insurance companies in South Africa

Annals of Actuarial Science, Nov 15, 2016

In this paper, we develop certain properties for discrete Brownian bridges and Ornstein–Uhlenbeck... more In this paper, we develop certain properties for discrete Brownian bridges and Ornstein–Uhlenbeck bridges, which we use in the successor papers Part 3B and Part 3C to analyse real economic data series, with a view to constructing stochastic interpolation models for the Wilkie asset model.

Annals of Actuarial Science, Jun 19, 2017

In this paper, we develop an extension to the Wilkie model, introducing share earnings and cover ... more In this paper, we develop an extension to the Wilkie model, introducing share earnings and cover (earnings/dividends) as new variables, and deriving share dividends from them. Earnings are available from April 1962, but only for the Non-Financial index, and for the All-Share one only from 1992. We construct a Composite Earnings Index from these series. We then find a suitable annual time series model for changes in earnings, and then for cover, which is mean-reverting. We compare this new model with the original model, in which changes in dividends were modelled directly. We also investigate monthly data to give parameters for stochastic interpolation. We observe an unusual change in earnings over 2015–2016, consider the implications of this and show specimen simulations.

Annals of Actuarial Science, Nov 21, 2016

This is the second subpart of three in a long paper in which we consider stochastic interpolation... more This is the second subpart of three in a long paper in which we consider stochastic interpolation for the Wilkie asset model, considering both Brownian bridges and Ornstein–Uhlenbeck (OU) bridges. In Part 3A, we developed certain properties for both these types of stochastic bridge, and we investigate the properties of many of our data series on the same lines. We have several economic or investment series, which all have their own peculiarities. In this paper, we cover only retail prices and wages. The other series are dealt with in Part 3C. We find that, although the annual series for the rate of inflation is generated by an AR(1) model, which is the discrete time equivalent of an OU process, an OU bridge is not suitable. We need to use a Brownian bridge on the logarithm of the Price Index. Further, the standard deviation of the monthly increments in any year is, as we find empirically from the data, a function of the change in the annual value, and further there is correlation between the monthly increments in successive years.

Annals of Actuarial Science, Nov 24, 2016

This is the third and last subpart of a long paper in which we consider stochastic interpolation ... more This is the third and last subpart of a long paper in which we consider stochastic interpolation for the Wilkie asset model, considering both Brownian bridges and Ornstein–Uhlenbeck (OU) bridges. In Part 3A, we developed certain properties for both these types of stochastic bridge, and in Part 3B we investigated retail prices and wages. In this paper, we investigate the remainder of many of our data series, relating to shares and interest rates. We conclude that, regardless of the form of the annual model, the monthly data within each year can be modelled by Brownian bridges, usually on the logarithm of the principal variable. But in no case is a simple Brownian bridge enough, and all series have their own peculiarities. Overall, however, our modelling produces simulations that are realistic in comparison with the known data. Many of our findings would apply to any similar model used for simulation over time. Our results have considerable importance for financial economics. We reconcile the conflict between the long-term mean-reverting modelling of Schiller and the short-term random walk modelling of Fama. This conclusion therefore has very wide significance.

Annals of Actuarial Science, Oct 27, 2015

In this paper, we consider a number of practical and theoretical aspects of the Wilkie asset mode... more In this paper, we consider a number of practical and theoretical aspects of the Wilkie asset model, many of which apply to any similar model used for simulation over time. We discuss the experience of the Wilkie model since 2009. We then discuss the variables that can form the working set, the input set and the output set, all of which may be different. There are different ways of simulating, either in a linear parallel structure or in a branching tree structure. We then discuss the initial conditions required, which may be market conditions at some date, or may be "neutral" initial conditions, which may be defined in different ways. One method of generating initial conditions would be to simulate them randomly, from their own long-term distribution, and we show how to calculate the means, variances and covariances of these. What we call "neutralising parameters" may have a role, and we discuss how these may be found. Finally, we suggest using additional information in the first periods of the simulation to adjust the formulae or parameters for a limited "select period".

Sigma Journal of Engineering and Natural Sciences, Jun 1, 2018

Journal of risk and financial management, Jan 25, 2017

South African Actuarial Journal, 2021

In this paper, we propose a stochastic investment model for actuarial use in South Africa by mode... more In this paper, we propose a stochastic investment model for actuarial use in South Africa by modelling price inflation rates, share dividends, long-term and short-term interest rates for the period 1960–2018 and inflation-linked bonds for the period 2000–2018. Possible bi-directional relations between the economic series have been considered, the parameters and their confidence intervals have been estimated recursively to examine their stability, and the model validation has been tested. The model is designed to provide long-term forecasts that should find application in long-term modelling for institutions such as pension funds and life insurance companies in South Africa Keywords: Stochastic investment models; price inflation; share dividend yields; share dividends; share prices; long-term interest rates; short-term interest rates; inflation-linked bonds; South Africa

The North American Actuarial Journal, Jun 30, 2021

Parameter shrinkage applied optimally can always reduce error and projection variances from those... more Parameter shrinkage applied optimally can always reduce error and projection variances from those of maximum likelihood estimation. Many variables that actuaries use are on numerical scales, like age or year, which require parameters at each point. Rather than shrinking these toward zero, nearby parameters are better shrunk toward each other. Semiparametric regression is a statistical discipline for building curves across parameter classes using shrinkage methodology. It is similar to but more parsimonious than cubic splines. We introduce it in the context of Bayesian shrinkage and apply it to joint mortality modeling for related populations. Bayesian shrinkage of slope changes of linear splines is an approach to semiparametric modeling that evolved in the actuarial literature. It has some theoretical and practical advantages, like closed-form curves, direct and transparent determination of degree of shrinkage and of placing knots for the splines, and quantifying goodness of fit. It is also relatively easy to apply to the many nonlinear models that arise in actuarial work. We find that it compares well to a more complex state-of-the-art statistical spline shrinkage approach on a popular example from that literature.

Annals of Actuarial Science, Mar 1, 2011

In this paper we review the Wilkie asset model for a variety of UK economic indices, including th... more In this paper we review the Wilkie asset model for a variety of UK economic indices, including the Retail Prices Index, both without and with an ARCH model, the wages index, share dividend yields, share dividends and share prices, long term bond yields, short term bond yields and index-linked bond yields, in each case by updating the parameters to June 2009. We discuss how the model has performed from 1994 to 2009 and estimate the values of the parameters and their confidence intervals over various sub-periods to study their stability. Our analysis shows that the residuals of many of the series are much fatter-tailed than in a normal distribution. We observe also that besides the stochastic uncertainty built into the model by the random innovations there is also parameter uncertainty arising from the estimated values of the parameters.

Ekonomik yaklaşım, 2015

The increase in life expectancy of individuals poses a risk for insurance companies. If people li... more The increase in life expectancy of individuals poses a risk for insurance companies. If people live longer than anticipated, insurance companies make losses on their annuity books. The aim of this paper is hedging longevity risk, securitization of longevity risks with survivor swaps and price survivor swaps using Turkey Life Tables. In this paper, we examine the longevity risk and model Turkish mortality using the Lee-Carter and the Olivier-Smith model with beta and gamma distributions. In order to price the random payments under Q risk neutral pricing measure we use Wang transform. We calculate random payments of swap for different market prices of risk, different interest rates and different mortality models. The fixed payments of the swap is calculated by using the underlying mortality table. Then we compare the swap premiums which are the rates that equate the present values of fixed payments and random payments. As a result we find that swap premiums are not significantly affected by the market price of risk and interest rates. We conclude that the most important factor is the mortality model to get fair value of the swap.

Finansal araştırmalar ve çalışmalar dergisi, Jul 1, 2016

The increase in life expectancy of individuals poses a risk for insurance companies. If people li... more The increase in life expectancy of individuals poses a risk for insurance companies. If people live longer than anticipated, insurance companies make losses on their annuity books. The risk that survivor rates might be higher than anticipated is called the longevity risk. In this paper, a pension plan whose aim is to hedge its longevity risk with longevity hedging instrument such as vanilla swap has been considered. We find the optimal hedge ratio which is defined as the number of units held of the hedging instrument. The optimal hedge ratio is calculated under minimum variance hedging and exponential utility. For the hedge ratio we need the value of the swap. In order to price the swap, we modelled Turkish mortality by using the Lee-Carter model and the Cairns-Blake-Dowd model. We find optimal hedge ratios for female and male populations of Turkey for different mortality models and different risk criteria. The analysis showed that the hedge ratios do not change significantly for different mortality models. However, as we change the risk criteria we observe quite different optimal hedge ratios.

Annals of Actuarial Science, Nov 26, 2013

This paper develops a term structure model for the UK nominal, real and implied inflation spot ze... more This paper develops a term structure model for the UK nominal, real and implied inflation spot zero-coupon rates simultaneously. We start with fitting a descriptive yield curve model proposed by Cairns (1998) to fill the missing values for certain given days at certain maturities in the yield curve data provided by the Bank of England. We compare four different fixed 'exponential rate' parameter sets and decide the set of parameters which fits the data best. With the chosen set of parameters we fit the Cairns model to the daily values of the term structures. By applying principal component analysis on the hybrid data (Bank of England data and fitted spot rates for the missing values) we find three principal components, which can be described as 'level', 'slope' and 'curvature', for each of these series. We explore the relation between these principal components to construct a 'yield-only' model for actuarial applications. Main contribution of this paper is that the models developed in the paper enable the practitioners to forecast three term structures simultaneously and it also provides the forecast for whole term structures rather than just short and long end of the yield curves.

Annals of Actuarial Science, May 7, 2014

We construct yield curve models for the UK nominal, real and implied inflation spot rates conside... more We construct yield curve models for the UK nominal, real and implied inflation spot rates considering the linkage between their term structures and some macroeconomic variables, in particular, realised inflation and real GDP growth. The paper extends the benchmark "yield-only" model proposed by Şahin et al. (2014) by exploring the bidirectional relations between the yield curve factors and the macroeconomic variables and proposes a "yield-macro" model. Although a simple autoregressive order one process fits the yield curve factors quite well the insertion of some macroeconomic variables such as realised inflation and real GDP growth improves the models significantly. We also model macroeconomic variables that take the term structures into account and compare the yield-macro model with Wilkie's model both philosophically and empirically.

Mathematical and Statistical Methods for Actuarial Sciences and Finance

Bu calismada Turkiye'deki mevcut bugday bitkisel urun sigortasi icin farkli cografi tehlike b... more Bu calismada Turkiye'deki mevcut bugday bitkisel urun sigortasi icin farkli cografi tehlike bolgeleri bazinda hasar tutarlari incelenmis ve aktueryal adil primler hesaplanmistir. Tarim Sigortalari Havuzu (TARSIM) tarafindan belirlenen cografi tehlike bolgeleri dikkate alinarak 2010-2014 yillari arasinda bugday bitkisel urun sigortasi icin dolu teminati veren sigorta policelerinde odenen hasar tutarlari istatistiksel yontemlerle analiz edilmistir. Her bir tehlike bolgesi hasar verisine uygun istatistiksel dagilim belirlendikten sonra aktueryal denge goz onunde bulundurularak farkli prim hesaplama prensipleri ve yukleme faktorlerine gore aktueryal primler hesaplanmistir.

Springer Actuarial, 2021

This chapter gives an overview of the consequences of the novel coronavirus, COVID-19 on the insu... more This chapter gives an overview of the consequences of the novel coronavirus, COVID-19 on the insurance branch. The main problems caused by the pandemic on the commercial insurance, and in particular, on the business interruption and possible innovations are discussed. The aim is to prepare the reader for the following chapters specifically by demonstrating connections between different aspects of modelling a pandemic. These models are necessary to create new insurance products supplementing governments’ actions in response to a pandemic.

medRxiv (Cold Spring Harbor Laboratory), Sep 23, 2020

The crisis caused by COVID-19 revealed the global unpreparedness for handling the impact of a pan... more The crisis caused by COVID-19 revealed the global unpreparedness for handling the impact of a pandemic. In this paper, we present a first quarter chronicle of COVID-19 in Hubei China, Italy and Spain, specifically their infection speed, death and fatality rates. By fitting distributions to these rates, we look for the effectiveness of government measures during the pandemic through a number of statistical approaches.

arXiv (Cornell University), Dec 24, 2019

In this paper, we propose a stochastic investment model for actuarial use in South Africa by mode... more In this paper, we propose a stochastic investment model for actuarial use in South Africa by modelling price inflation rates, share dividends, long term and short-term interest rates for the period 1960-2018 and inflation-linked bonds for the period 2000-2018. Possible bi-directional relations between the economic series have been considered, the parameters and their confidence intervals have been estimated recursively to examine their stability and the model validation has been tested. The model is designed to provide long-term forecasts that should find application in long-term modelling for institutions such as pension funds and life insurance companies in South Africa

Annals of Actuarial Science, Nov 15, 2016

In this paper, we develop certain properties for discrete Brownian bridges and Ornstein–Uhlenbeck... more In this paper, we develop certain properties for discrete Brownian bridges and Ornstein–Uhlenbeck bridges, which we use in the successor papers Part 3B and Part 3C to analyse real economic data series, with a view to constructing stochastic interpolation models for the Wilkie asset model.

Annals of Actuarial Science, Jun 19, 2017

In this paper, we develop an extension to the Wilkie model, introducing share earnings and cover ... more In this paper, we develop an extension to the Wilkie model, introducing share earnings and cover (earnings/dividends) as new variables, and deriving share dividends from them. Earnings are available from April 1962, but only for the Non-Financial index, and for the All-Share one only from 1992. We construct a Composite Earnings Index from these series. We then find a suitable annual time series model for changes in earnings, and then for cover, which is mean-reverting. We compare this new model with the original model, in which changes in dividends were modelled directly. We also investigate monthly data to give parameters for stochastic interpolation. We observe an unusual change in earnings over 2015–2016, consider the implications of this and show specimen simulations.

Annals of Actuarial Science, Nov 21, 2016

This is the second subpart of three in a long paper in which we consider stochastic interpolation... more This is the second subpart of three in a long paper in which we consider stochastic interpolation for the Wilkie asset model, considering both Brownian bridges and Ornstein–Uhlenbeck (OU) bridges. In Part 3A, we developed certain properties for both these types of stochastic bridge, and we investigate the properties of many of our data series on the same lines. We have several economic or investment series, which all have their own peculiarities. In this paper, we cover only retail prices and wages. The other series are dealt with in Part 3C. We find that, although the annual series for the rate of inflation is generated by an AR(1) model, which is the discrete time equivalent of an OU process, an OU bridge is not suitable. We need to use a Brownian bridge on the logarithm of the Price Index. Further, the standard deviation of the monthly increments in any year is, as we find empirically from the data, a function of the change in the annual value, and further there is correlation between the monthly increments in successive years.

Annals of Actuarial Science, Nov 24, 2016

This is the third and last subpart of a long paper in which we consider stochastic interpolation ... more This is the third and last subpart of a long paper in which we consider stochastic interpolation for the Wilkie asset model, considering both Brownian bridges and Ornstein–Uhlenbeck (OU) bridges. In Part 3A, we developed certain properties for both these types of stochastic bridge, and in Part 3B we investigated retail prices and wages. In this paper, we investigate the remainder of many of our data series, relating to shares and interest rates. We conclude that, regardless of the form of the annual model, the monthly data within each year can be modelled by Brownian bridges, usually on the logarithm of the principal variable. But in no case is a simple Brownian bridge enough, and all series have their own peculiarities. Overall, however, our modelling produces simulations that are realistic in comparison with the known data. Many of our findings would apply to any similar model used for simulation over time. Our results have considerable importance for financial economics. We reconcile the conflict between the long-term mean-reverting modelling of Schiller and the short-term random walk modelling of Fama. This conclusion therefore has very wide significance.

Annals of Actuarial Science, Oct 27, 2015

In this paper, we consider a number of practical and theoretical aspects of the Wilkie asset mode... more In this paper, we consider a number of practical and theoretical aspects of the Wilkie asset model, many of which apply to any similar model used for simulation over time. We discuss the experience of the Wilkie model since 2009. We then discuss the variables that can form the working set, the input set and the output set, all of which may be different. There are different ways of simulating, either in a linear parallel structure or in a branching tree structure. We then discuss the initial conditions required, which may be market conditions at some date, or may be "neutral" initial conditions, which may be defined in different ways. One method of generating initial conditions would be to simulate them randomly, from their own long-term distribution, and we show how to calculate the means, variances and covariances of these. What we call "neutralising parameters" may have a role, and we discuss how these may be found. Finally, we suggest using additional information in the first periods of the simulation to adjust the formulae or parameters for a limited "select period".

Sigma Journal of Engineering and Natural Sciences, Jun 1, 2018

Journal of risk and financial management, Jan 25, 2017

South African Actuarial Journal, 2021

In this paper, we propose a stochastic investment model for actuarial use in South Africa by mode... more In this paper, we propose a stochastic investment model for actuarial use in South Africa by modelling price inflation rates, share dividends, long-term and short-term interest rates for the period 1960–2018 and inflation-linked bonds for the period 2000–2018. Possible bi-directional relations between the economic series have been considered, the parameters and their confidence intervals have been estimated recursively to examine their stability, and the model validation has been tested. The model is designed to provide long-term forecasts that should find application in long-term modelling for institutions such as pension funds and life insurance companies in South Africa Keywords: Stochastic investment models; price inflation; share dividend yields; share dividends; share prices; long-term interest rates; short-term interest rates; inflation-linked bonds; South Africa

The North American Actuarial Journal, Jun 30, 2021

Parameter shrinkage applied optimally can always reduce error and projection variances from those... more Parameter shrinkage applied optimally can always reduce error and projection variances from those of maximum likelihood estimation. Many variables that actuaries use are on numerical scales, like age or year, which require parameters at each point. Rather than shrinking these toward zero, nearby parameters are better shrunk toward each other. Semiparametric regression is a statistical discipline for building curves across parameter classes using shrinkage methodology. It is similar to but more parsimonious than cubic splines. We introduce it in the context of Bayesian shrinkage and apply it to joint mortality modeling for related populations. Bayesian shrinkage of slope changes of linear splines is an approach to semiparametric modeling that evolved in the actuarial literature. It has some theoretical and practical advantages, like closed-form curves, direct and transparent determination of degree of shrinkage and of placing knots for the splines, and quantifying goodness of fit. It is also relatively easy to apply to the many nonlinear models that arise in actuarial work. We find that it compares well to a more complex state-of-the-art statistical spline shrinkage approach on a popular example from that literature.

Annals of Actuarial Science, Mar 1, 2011

In this paper we review the Wilkie asset model for a variety of UK economic indices, including th... more In this paper we review the Wilkie asset model for a variety of UK economic indices, including the Retail Prices Index, both without and with an ARCH model, the wages index, share dividend yields, share dividends and share prices, long term bond yields, short term bond yields and index-linked bond yields, in each case by updating the parameters to June 2009. We discuss how the model has performed from 1994 to 2009 and estimate the values of the parameters and their confidence intervals over various sub-periods to study their stability. Our analysis shows that the residuals of many of the series are much fatter-tailed than in a normal distribution. We observe also that besides the stochastic uncertainty built into the model by the random innovations there is also parameter uncertainty arising from the estimated values of the parameters.

Ekonomik yaklaşım, 2015

The increase in life expectancy of individuals poses a risk for insurance companies. If people li... more The increase in life expectancy of individuals poses a risk for insurance companies. If people live longer than anticipated, insurance companies make losses on their annuity books. The aim of this paper is hedging longevity risk, securitization of longevity risks with survivor swaps and price survivor swaps using Turkey Life Tables. In this paper, we examine the longevity risk and model Turkish mortality using the Lee-Carter and the Olivier-Smith model with beta and gamma distributions. In order to price the random payments under Q risk neutral pricing measure we use Wang transform. We calculate random payments of swap for different market prices of risk, different interest rates and different mortality models. The fixed payments of the swap is calculated by using the underlying mortality table. Then we compare the swap premiums which are the rates that equate the present values of fixed payments and random payments. As a result we find that swap premiums are not significantly affected by the market price of risk and interest rates. We conclude that the most important factor is the mortality model to get fair value of the swap.

Finansal araştırmalar ve çalışmalar dergisi, Jul 1, 2016

The increase in life expectancy of individuals poses a risk for insurance companies. If people li... more The increase in life expectancy of individuals poses a risk for insurance companies. If people live longer than anticipated, insurance companies make losses on their annuity books. The risk that survivor rates might be higher than anticipated is called the longevity risk. In this paper, a pension plan whose aim is to hedge its longevity risk with longevity hedging instrument such as vanilla swap has been considered. We find the optimal hedge ratio which is defined as the number of units held of the hedging instrument. The optimal hedge ratio is calculated under minimum variance hedging and exponential utility. For the hedge ratio we need the value of the swap. In order to price the swap, we modelled Turkish mortality by using the Lee-Carter model and the Cairns-Blake-Dowd model. We find optimal hedge ratios for female and male populations of Turkey for different mortality models and different risk criteria. The analysis showed that the hedge ratios do not change significantly for different mortality models. However, as we change the risk criteria we observe quite different optimal hedge ratios.

Annals of Actuarial Science, Nov 26, 2013

This paper develops a term structure model for the UK nominal, real and implied inflation spot ze... more This paper develops a term structure model for the UK nominal, real and implied inflation spot zero-coupon rates simultaneously. We start with fitting a descriptive yield curve model proposed by Cairns (1998) to fill the missing values for certain given days at certain maturities in the yield curve data provided by the Bank of England. We compare four different fixed 'exponential rate' parameter sets and decide the set of parameters which fits the data best. With the chosen set of parameters we fit the Cairns model to the daily values of the term structures. By applying principal component analysis on the hybrid data (Bank of England data and fitted spot rates for the missing values) we find three principal components, which can be described as 'level', 'slope' and 'curvature', for each of these series. We explore the relation between these principal components to construct a 'yield-only' model for actuarial applications. Main contribution of this paper is that the models developed in the paper enable the practitioners to forecast three term structures simultaneously and it also provides the forecast for whole term structures rather than just short and long end of the yield curves.

Annals of Actuarial Science, May 7, 2014

We construct yield curve models for the UK nominal, real and implied inflation spot rates conside... more We construct yield curve models for the UK nominal, real and implied inflation spot rates considering the linkage between their term structures and some macroeconomic variables, in particular, realised inflation and real GDP growth. The paper extends the benchmark "yield-only" model proposed by Şahin et al. (2014) by exploring the bidirectional relations between the yield curve factors and the macroeconomic variables and proposes a "yield-macro" model. Although a simple autoregressive order one process fits the yield curve factors quite well the insertion of some macroeconomic variables such as realised inflation and real GDP growth improves the models significantly. We also model macroeconomic variables that take the term structures into account and compare the yield-macro model with Wilkie's model both philosophically and empirically.

Mathematical and Statistical Methods for Actuarial Sciences and Finance

Bu calismada Turkiye'deki mevcut bugday bitkisel urun sigortasi icin farkli cografi tehlike b... more Bu calismada Turkiye'deki mevcut bugday bitkisel urun sigortasi icin farkli cografi tehlike bolgeleri bazinda hasar tutarlari incelenmis ve aktueryal adil primler hesaplanmistir. Tarim Sigortalari Havuzu (TARSIM) tarafindan belirlenen cografi tehlike bolgeleri dikkate alinarak 2010-2014 yillari arasinda bugday bitkisel urun sigortasi icin dolu teminati veren sigorta policelerinde odenen hasar tutarlari istatistiksel yontemlerle analiz edilmistir. Her bir tehlike bolgesi hasar verisine uygun istatistiksel dagilim belirlendikten sonra aktueryal denge goz onunde bulundurularak farkli prim hesaplama prensipleri ve yukleme faktorlerine gore aktueryal primler hesaplanmistir.

Springer Actuarial, 2021

This chapter gives an overview of the consequences of the novel coronavirus, COVID-19 on the insu... more This chapter gives an overview of the consequences of the novel coronavirus, COVID-19 on the insurance branch. The main problems caused by the pandemic on the commercial insurance, and in particular, on the business interruption and possible innovations are discussed. The aim is to prepare the reader for the following chapters specifically by demonstrating connections between different aspects of modelling a pandemic. These models are necessary to create new insurance products supplementing governments’ actions in response to a pandemic.