Boston-based AIR Worldwide Corporation (AIR) said it has developed a catastrophe model to help insurers manage hurricane risks in Latin America.
Tim Doggett, senior research scientist at AIR, said in a statement, "On average, Mexico experiences almost two hurricane landfalls per year, which is similar to the United States.
Mr. Doggett noted, "The most intense storms have the potential to cause significant insured losses when they make landfall in a highly developed area on Mexico's coastline, as demonstrated by the $2 billion loss from Hurricane Wilma in 2005 and the $1 billion loss from Hurricane Gilbert in 1988, if it were to recur today."
The new probabilistic model, AIR tropical cyclone model for Mexico, is designed to estimate insured losses from wind and flood to buildings, contents and business interruption, AIR Worldwide said.
AIR noted that even tropical cyclones with low wind speeds can cause significant flooding in Mexico, in part due to the geography of the area, and flooding is typically covered under both residential and commercial insurance policies.
The new model, AIR said, incorporates conditions such as elevation and soil data to simulate the effects of flooding. It also includes a catalog containing more than 50,000 potential landfalling tropical cyclones and incorporates conditions caused by the El Ni?o Southern Oscillation (ENSO).
ENSO refers to an oscillation in the surface pressure (atmospheric mass) between the southeastern tropical Pacific and the Australian-Indonesian regions. When the waters of the eastern Pacific are abnormally warm (an El Ni?o event), sea level pressure drops in the eastern Pacific and rises in the west.
Mr. Doggett said, "The AIR model embodies the most current research on meteorology, hydrology, and the vulnerability of structures to wind and flood. It has been validated extensively using detailed claims data from a number of historical storms such as 2005′s Hurricane Wilma, which was the most intense hurricane ever recorded in the Atlantic basin."
AIR said that its tropical cyclone model for Mexico is available immediately in AIR's CLASIC/2 and CATRADER catastrophe risk modeling applications.
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