NU Online News Service, June 3, 1:07 p.m. EDT
The Florida Commission on Hurricane Loss Projection Methodology has approved catastrophe modeling firm Risk Management Solutions' new hurricane model.
The distinction clears the way for insurers to use the model, RMS U.S. Hurricane Model version 11.0, in rate filings with the Florida Office of Insurance Regulation.
Actuarial consultant Martin Simons, who is a member of a team that investigates models for the commission, says the new RMS model is "adequately justified."
"We truly grilled them [RMS]," says Simons from Tallahassee, Fla.
The commission gave the model its stamp of approval June 2, a day into the official start of the Atlantic hurricane season. Simons is on a team of professionals—which includes a meteorologist, a structural engineer, a computer scientist and a statistician—that visited RMS in late March to review the model and then brought the findings back to the commission.
"Everything stood up," Simons adds. "They appropriately reviewed all scientific literature. It was an intense session of questioning."
The model "does do a better job" of assessing hurricane risk, Simons says.
Version 11.0 shifts risk around. For example, risk increases in Central Florida compared to prior models and decreases in some coastal areas, such as Miami-Dade. RMS says new data revealed more about how hurricanes behave, especially after making landfall. Plus, the modeler incorporated mitigation efforts and code enforcement in states.
Even with the changes, "coastal locations are still much more subject to hurricane risk than inland locations," says RMS in a statement. "Overall, the loss to the state as a whole increases by 6.5 percent under the new model."
Many states rely on the Florida commission to put its approval stamp on the validity of a model.
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