A debate over whether rating agencies and modeling firms areoverreacting to recent catastrophe events took an odd turn recentlywhen experts warned that companies will play games with catastrophemodels to maintain current ratings.
During the World Insurance Forum here late last month, the“overreaction” question resurfaced frequently, as executivesdiscussed the lingering impact of Hurricane Katrina and otherwindstorms.
On the one hand, insurer and reinsurer executives areanticipating increased prices and higher demand for catastrophereinsurance protection that new versions of cat models will drivelater this year. On the other hand, even modeling firm executivesare worried about increasing rating agency requirements that hingeon loss estimates generated by updated cat models.
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