HURRICANE MODEL APPROVED

The Florida Commission on Hurricane Loss Projection Methodology has for the ninth consecutive year certified AIR Worldwide Corporation’s 2005 U.S. Hurricane Model. The state requires hurricane models to be certified each year.

AIR updated its model to include the storms from both the 2003 and 2004 hurricane seasons. While five hurricanes made landfall in 2004, the season followed several seasons of below-average activity. The addition of the above average, though not highly unusual season, resulted in a small increase to the long-term average hurricane frequency, actually restoring it to previous levels.

AIR’s model enables insurers to account for the new annual deductible that must be offered to policyholders in Florida. Clients have the option to estimate losses based either on an annual or per-occurrence deductible. The model also allows insurers to apply a demand surge factor to their loss estimates on an aggregate basis to account for the increase in repair costs resulting from multiple storms in close proximity.

Topics Catastrophe Natural Disasters Hurricane