The speaker of the Florida House of Representatives is putting the methods of catastrophe modeling firms under scrutiny and has written them demanding their proprietary modeling information.
Jose Fuentes, a spokesperson for Speaker Marco Rubio, R-Coral Gables, said modelers' data, which insurers use in setting risks, has become a point of concern, in part because a local paper–The Tampa Tribune–wrote an article suggesting the model produced by Risk Management Solutions model in Mr. Fuentes words "might be skewed."
Homeowners' insurance rates in the state have jumped more than 100 percent in some cases since insurers experienced major hurricane losses in 2004 and 2005.
Newark, Calif.-based RMS said the Tribune article is inaccurate and one-sided, with the chief criticism coming from a climatologist who worked for a competitor.
The letter from Mr. Rubio, besides RMS, went to EQECAT Inc. in Oakland, Calif., Applied Research Associates, Inc. in Raleigh, N.C., and AIR Worldwide Corp. in Boston.
It asked for hurricane loss projection models for Florida, "including the assumptions and factors used in developing the models, including any proprietary information," and any models the firms planned to submit.
Mr. Rubio asked the modelers to identify "any information that is a trade secret" and promised "it will be protected from public records requests." The material is sought to further a "House investigation into the best methods to lower Florida's insurance rates," he explained.
This afternoon, RMS responded to Mr. Rubio's request.
The company said its submission includes documentation on the assumptions and factors used in developing the RMS hurricane loss projection model.
"We have provided thorough detail on all of the modules of the RMS model: stochastic storm set generation, hurricane characteristics and the windfield generation process, the derivation and implementation of vulnerability functions, actuarial standards including a full discussion of our financial module, and the systematic process RMS undertakes to develop our software technology to implement the hurricane model.
"We also welcome the opportunity to meet with representatives from the Florida Legislature for presentations and discussions on all components of our models," the company said.
Bob Lotane, a spokesperson for Florida Insurance Commissioner Kevin McCarty, who also received Mr. Rubio's request for loss projection model data, said the RMS model that has been mentioned is not due for submission until Feb. 28 and the deadline for approval is in June.
At the Florida Insurance Council trade group, Executive Vice President Sam Miller noted that loss models in Florida must meet the standards of the Florida Commission on Hurricane Loss Projection, which were put in place after Hurricane Andrew in 1992.
Florida's new Republican Gov. Charlie Crist ran for office on a promise to cut both taxes and insurance rates and Mr. Miller said issues over insurance rates in the state are now "as politically charged as they've been in the 20 years I've been in the insurance industry."
The legislature is due to meet next week in a special session to take up insurance legislation. Mr. Fuentes said he did not know if modeling would be the subject of hearings by the House because legislators would have to take a look at what modelers supplied "before we go into that process."
This posting updated 4:28 p.m.
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