Insurance Risk Engineering Application through Monte Carlo Simulation

This paper investigates the insurance risks associated with overhead transmission towers exposed to high-speed winds in specific regions and estimates the corresponding insurance premium. The study focuses on engineering insurance, an essential tool for mitigating potential losses and ensuring the solvency of insurance companies. Despite its significance, the practical application of engineering insurance remains limited. To address this gap, the paper employs the Monte Carlo Simulation method to predict the reliability of transmission towers under extreme weather conditions. By estimating the expectation of claims with simulation methods, the study calculates the potential loss and determines the minimum premium required to maintain the insurance company's solvency. The knowledge gained from this study can inform decision-making processes, strengthen infrastructure, and enhance the overall stability of insurance companies operating in the engineering insurance domain.