;Taiwan locates in Circum-Pacific earthquake zone and is at high risk of earthquakes. However, in terms of disaster risk management, traditional earthquake insurance could not entirely cover the full spectrum from catastrophes. Index insurance can nevertheless help insurance applicants transfer the risk of catastrophes and has less adverse selection and moral hazard problems. The current study reviewed the representative index insurance cases in Taiwan in order to contribute to the future development of index insurance. Index insurance is an insurance that is linked to an index, such as rainfall, temperature, humidity, or crop yields, rather than actual loss. This approach solves some of the problems that limit the application of traditional insurance in developing countries. One key advantage is that the overhead costs are lower. The other important advantage is that index insurance is subject to less adverse selection and moral hazard than traditional insurance. The current study is also practically designed for earthquake index insurance. The study explored the annual frequency of earthquakes, on the island of Taiwan, which have magnitude greater than 7 and of which the source depth is less than 30Km.From the result of the exploration, we can obtain the average annual loss of earthquake in Taiwan which can be used as a reference for premiums.
