Presented by: Catastrophe Models

Though the update of the RMS hurricane model has stirred a lot of debate, it is changing insurers’ assessment of risk in several significant ways.

There’s no doubt that the new model is directionally more appropriate. It will get you closer to what the actual loss was for most companies, but there’s a lot of debate out there.

Sanjay Godhwani, Chartis U.S. and Canada Region

The February 2011 release of RMS U.S. Hurricane Model version 11.0 expands on earlier models based, in part, on lessons learned in the wake of extraordinary losses in 2005 and 2008. The new version makes substantial changes in three key areas: it improves the modeling of storm surge; it reassesses building vulnerability, especially for roofs in Gulf Coast states; and it accounts for stronger wind speeds carrying much farther inland. The assessment of greater hurricane exposure inland was also a very significant change, because many catastrophe- averse companies focused entirely on writing business inland.

Companies that are taking a wait-and-see attitude could be simply delaying the inevitable.

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