Posted On: November 15, 2005, 12:53 pm CST

Posted By: André Fredette

I believe Karen's response while probability accurate about underinsurance values misses the point. It was well known through engineering reports done by Engineers corps that any Hurricane above 3 would breach the dikes. Therefore, armed with this engineering knowledge AIR should have run two scenarios. One with a hurricane at 2 or below and one doomsday version with 3 or above which would assume the catastrophic failures of the dikes. Nature does not follow the Pareto curve. any underwriter worth his salt should know
that cat models are just the starting
point not the ending point of accumulation
evaluation.