Newark, Calif.-based Risk Management Solutions said today that based on results from its revised hurricane modeling, annualized insurance losses will jump 40 percent on average across the Gulf Coast, Florida and the Southeast.

The 40 percent increase, RMS said, is the result of increases to hurricane landfall frequencies in the company's U.S. hurricane model.

When compared to a pre-2004 historical baseline that was previously used quantifying insurance risk, the increases in modeled annualized losses are closer to 50 percent in the Gulf, Florida and the Southeast.

RMS also reported that, for the Mid-Atlantic and Northeast coastal regions, the higher frequency model will produce modeled annualized insurance losses that are 25-to-30 percent higher than the model based on the 1900-2005 long-term model.

Earlier this week, AccuWeather.com, a commercial weather service, issued a prediction that the northeastern coast of the United States will be the target of a major hurricane that could hit this year.

RMS said its new view of risk is driven by an increase of more than 30 percent in the modeled frequency of major (Saffir-Simpson Category 3-5) hurricanes making landfall in the United States, noting that the increase accounts for current elevated levels of hurricane activity in the Atlantic basin that are expected to persist for at least the next five years.

To address this period of elevated frequency and intensity of storms, RMS said it consulted with representatives from all segments of the insurance industry and updated its U.S. and Caribbean hurricane models to provide a "medium-term"--five-year--forward-looking view of risk for estimating potential catastrophe losses. Previously, catastrophe model results were based on a long-term historical average.

The RMS medium-term view of hurricane activity was developed in cooperation with a panel of experts in hurricane climatology convened by RMS in October 2005.

Robert Muir-Wood, chief research officer at RMS, noted that while the experts don't agree on the causes of elevated hurricane activity, they do agree that land-falling hurricanes are now more likely than long-term historical averages would suggest.

He said that the scientists still debate about whether the principal cause is a natural, multidecadal variability, or whether there is a significant influence from global warming.

The new RMS outlook regarding heightened hurricane intensity and landfall frequency will be incorporated in the updated RMS U.S. and Caribbean Hurricane Models, part of the May 2006 release of the RiskLink and RiskBrowser 6.0 catastrophe modeling platforms, RMS said.

Two other modeling vendors--Boston-based AIR Worldwide and Oakland, Calif.-based Eqecat--are also in the process of reworking their hurricane models.

Special Reports /

Fla., Gulf Hurricane Losses To Jump 40%, RMS Says

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