Fair Insurance Premium Level in Connected SIR Model under Epidemic Outbreak

Abstract

In this paper we aim to study an optimal insurance premium level for health-care in a deterministic and stochastic SIR models with migration fluxes and vaccination of population. The studied model considers two standard SIR centres connected via links and continuous migration fluxes. The premium is calculated using the basic equivalence principle. Even in this simple setup there are non-intuitive results that illustrate how the premium depends on migration rates, severeness of a disease and initial distribution of healthy and infected individuals through the centres. We investigate how the vaccination program effects the insurance costs by comparing the savings in benefits with the expenses for vaccination. We compare the results of deterministic and stochastic models.