This paper synthesizes and extends the literature on multivariate two-part regression modelling, with an emphasis on actuarial applications. To illustrate the modelling, we use data from the US Medical Expenditure Panel Survey to explore expenditures that come in two parts. In the first part, zero expenditures correspond to no payments for health care services during a year. For the second part, a positive expenditure corresponds to the payment amount, a measure of utilization. Expenditures are multivariate, the five components being (i) office-based, (ii) hospital outpatient, (iii) emergency room, (iv) hospital inpatient, and (v) home health expenditures. Not surprisingly, there is a high degree of association among expenditure types and so we utilize models that account for these associations. These models include multivariate binary regressions for the payment type and generalized linear models with Gaussian copulas for payment amounts.As anticipated, the strong associations among expenditure types allow us to establish significant model differences on an in-sample basis. Despite these strong associations, we find that commonly used statistical measures perform similarly on a held-out validation sample. In contrast, out-of-sample risk measures used by actuaries reveal differences in the association among expenditure types.

This article investigates how a particular type of personal experience-"no-loss" experience with minor earthquakes-affects financial decisions such as insurance purchases. We find a small temporary increase in insurance demand in areas that experience a shaking with moderate intensity, or multiple shakings with light intensity. An analysis of Google Trends data confirms an immediate increase in interest in insurance though not in seismic retrofit. These findings extend the applicability of the availability bias and hot-hand fallacy to a broader context: financial decisions may be motivated by not only loss experience, but also recent no-loss experience, as people may extrapolate their "feeling" to something worse. However, such experience does not motivate long-term behavioral change.

There has been a rise of innovative parametric insurance solutions in recent years covering a wide range of risks and serving clients from individuals, to businesses, and to governments. These parametric insurance products cover risks that are otherwise uninsured or underinsured, by simplifying product design and reducing transaction costs. This paper offers a comprehensive review of parametric insurance including a classification of the types of contract and an overview of market practices. We outline the benefits and concerns of parametric insurance in comparison with indemnity insurance, and discuss the legal principle and regulatory compliance matters. We then survey the current global market and identify areas where insurance and reinsurance companies can play important roles in offering or supporting parametric insurance operations. Lastly, we offer a case study on a type of parametric insurance designed to cover earthquake risk in California.

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