Risk Management Solutions released a new hurricane model earlier this year. Chief Research Officer Robert Muir-Wood offers a closer look at the model and the science behind it.


Catastrophe models, in contrast to highly predictive auto-claims models, have a relatively small number of historical data points. That means cat-modeling methods and data must continue to advance.

Sometimes shifts in our understanding of catastrophe risk happen as a result. This may continue in the future.

Enhancements in our version 11.0 RMS hurricane catastrophe model have principally come through the availability of more and better data on hurricane behavior pre- and post-landfall, due to increased instrumentation (we now have 10-times as much detailed wind-speed data available compared to eight years ago when we last updated our hurricane hazard model), together with ongoing increases in computing power that enable more simulations and at higher resolution than previously.

The scientific community has known through experience that there are many factors at play in determining how quickly hurricanes weaken after landfall. Information for the National Hurricane Center, however, was not sufficiently detailed prior to 1990 to allow us to understand how hurricanes really decay.

Instead of waiting for hundreds more hurricanes to make landfall, we employed the best available numerical weather-prediction models and simulated hurricanes moving onshore to see how they behave after landfall. As a result, we have been able to show how storm weakening relates to the size and speed of the storm and varies over different types of terrain—from the Florida Everglades to the dry Texas plains.

Ongoing growth in computing power also fueled another advancement: it allowed us to model complex and catastrophic storm surges, like those experienced during Hurricane Katrina.

Even after Katrina had weakened to a Category 3, the storm surge at landfall in Mississippi was the height expected of a Category 5 storm. The new model captures the way the surge that flooded New Orleans first came from the east and then a few hours later from the north. Improvements in major flood defenses are also included in the model.

We have now analyzed $18 billion of detailed claims data from storms that have occurred over the past 20 years. We worked closely with engineering consultants to re-examine code enforcement and building practices in U.S. hurricane states, including regions where there have been few recent hurricane landfalls.

The model changes mean that wind risk has generally increased for all hurricane states on an industrywide basis. However, changes to individual portfolios vary considerably, depending on the region and line of business.


Everything we have changed is evidence- and data-driven. We found in a couple of areas that new data showed the level of risk was higher than previously identified. We have a responsibility to incorporate new information into our models whether it increases or decreases risk estimates. We had communicated the direction of the expected changes for several months before releasing the new model.

Models And Insurance Rates

Catastrophe models do not set insurance rates. Insurers and regulators set rates based on factors related to local competition, supply and demand, the costs of other loss elements beyond catastrophe risks, and ultimately by the approval procedures of  state insurance authorities. We use exactly the same models for calculating catastrophe-loss costs as for estimating how much capital insurers need to hold to guarantee they can survive a major loss. In all that we do, we aim to provide objective and unbiased risk information.

Model Approval

The new RMS hurricane model was developed over a three-year period, involving some of the leading hurricane climatologists as well as the leading scientist modelers within RMS. Expert third parties have peer-reviewed this model.

In the months since the model was introduced, RMS representatives have been visiting with state regulatory and legislative officials to educate them on the new model and discuss the implications for risk estimates within each state.

In Florida, models must undergo a rigorous review process with the Florida Commission on Hurricane Loss Projection Methodologies before they are permitted for use in the ratemaking process.

 The commission approved the model on June 2.