New Bomb Data Beefs Up AIR Terror Model

Boston-based catastrophe modeling firm AIR Worldwide Corp. announced yesterday it has released an updated model for U.S. terrorism events using new data on injuries and bomb explosions.

The firm said release of the new U.S. Terrorism Model, available in Version 9.5 of its catastrophe risk management systems, incorporates two years of research into the effects of conventional bomb blasts in complex urban environments.

AIR said it has enhanced its damage functions to account for the varying impact of bombs in relation to the density of properties in close proximity to better reflect the local building environment for all locations in the United States.

“AIR's U.S. Terrorism Model can assist insurers in evaluating their terrorism risk and perform detailed loss analyses to identify high concentrations of potential loss in small areas such as city centers,” said Jack Seaquist, senior manager at AIR Worldwide.

His statement added, “The model enables insurers to perform a fully probabilistic loss analysis that considers the full range of likely attack locations and weapon type combinations, estimates the losses and assigns an estimated probability to each level of loss.”

AIR said also that the injury loss distributions implemented in the model have been updated to reflect the latest research from the medical community regarding trauma from terrorist bomb blasts.

The modeling firm explained that distributions take into account injuries that result from damage to the building (airborne debris and collapsing building elements) and the direct effects of overpressure waves.

Injury loss data in the updated model uses state average claim costs by injury type based on the latest three policy periods of historical claims, as reported to the National Council on Compensation Insurance. Benefits were brought to their current levels and medical costs and wages were trended using regional indices, AIR said.

The company said the new model incorporates a greatly enhanced industry property exposure database featuring more accurate building locations and building-specific characteristics for commercial properties.

Physical attributes, such as number of floors, construction type and wall type are incorporated by location. The property exposure database for residential properties features a significant increase in resolution, as well, AIR said.

According to Mr. Seaquist, “As catastrophe models become more sophisticated and detailed, the exposures used as input to the models need to be more accurate and at higher resolution. This is particularly true for the terrorism model, where the effects of an attack can be highly localized and street address information, including the physical attributes of properties, has become almost essential.”