Risk Management Solutions' Version 11 catastrophe model isshifting rates higher and causing some risks to move from theadmitted market back to excess-and-surplus-lines carriers, but theleader of one managing general agent group is concerned about themodel's overall impact on underwriting practices.

During the 86th annual meeting ofthe American Association of Managing General Agents, Immediate PastPresident Mark Rothert said RMS 11 is affecting the availabilityand cost of reinsurance—causing some risks to move out of theadmitted markets.

AAMGA President Wayne G. Forest adds that one troublingdevelopment with RMS 11 is that it is causing insurers to turn downbusiness, even risks that have been profitable for them for years,due to the increases in aggregate exposure exhibited by the model.In his view, underwriting is being taken out of the hands of humansand is now subject to a computer program.

Version 11, Forest says, will cause rates to rise incatastrophe-prone areas by 3-4 percent and could eventually driveincreases of as much as 10 percent in some cases. He also believessome of that rate increase will be mitigated with higherdeductibles.