Florida’s residential property insurance market is bracing for even more volatility after the state’s modeling commission approved the use of the new Risk Management Services (RMS) catastrophe model. The Florida Commission on Hurricane Loss Projection Methodology approved the RMS U.S. Model Version 11.0, which means it can now be used by insurers in rate filings.
RMS officials indicated the new model calculated that the state’s overall expected losses had increased by 6.5 percent. While coastal locations are still at a higher risks than inland areas, the relative differences between coastal and inland regions is far less than they were thought to be. Wind-risk in some coastal locations, such as Miami-Dade, is lower than had previously been understood, while the risk in Central Florida, in areas such as Orange County, is actually higher.
“It is a very sound model,” said Jack Nicholson, chief operating officer for the Florida Hurricane Catastrophe Fund. “But there is going to be a big change between last year and this year.”
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