RMS, the Newark, Calif.-based catastrophe risk management firm, has released updated RMS Europe windstorm models and North Atlantic hurricane models.
The 15.0 RMS Europe Windstorm Models’ hazard and vulnerability components have been updated to strengthen risk selection and portfolio management capabilities, while a new view of risk reflecting climate variability has been added, RMS said in a statement.
These changes will enable companies to better understand windstorm variability and support Solvency II model validation requirements, the modeling company said.
In addition, the RMS North Atlantic Hurricane Models have new capabilities to manage coastal flood risk and have been updated with the latest science and data on hurricane activity.
“RMS’s version 15.0 models deliver even sharper risk differentiation to help our clients further optimize their risk selection and more efficiently allocate capital,” said Matthew Grant, general manager, models and data at RMS. “We’ve built on the models’ existing methodology and incorporated several years of new data and scientific research to deliver the most accurate representation of the risk.”
Europe Windstorm Models
The updated RMS reference view of Europe windstorm incorporates the most current record of windstorms and wind-speeds, improved risk correlation across Europe and enhanced vulnerability regionalization in several countries, all to strengthen risk selection and portfolio management capabilities.
The models also provide the ability to explore how climate variability impacts the view of risk. For a variable peril like European windstorm, having a shorter view of the risk based on the last 25 years of windstorm activity enables validation of the model against a company’s own historical loss experience.
“By adding the climate variability component we’ve provided our clients with a transparent model validation process to meet Solvency II regulations, as well as a means to better understand how historical storm variability can affect their modeled losses,” said Grant. “Since storm activity in recent years has been relatively quiet and most insurers’ claims records only date back 10 to 20 years, the new climatic view provides our clients with an important perspective to develop a more complete view of the risk.”
North Atlantic Hurricane Models
Following analysis of nearly $3 billion in claims data for Hurricane Irene (2011) and Superstorm Sandy (2012), the North Atlantic Hurricane Models include new functionality to manage coastal flood risk.
Companies can quantify the effect on flood loss of multiple basement levels in a building and the total value of contents stored in basements. The models also introduce more choice in selecting location-specific content triggers for business interruption losses by enabling business interruption to be dependent on either contents or building damage rather than on building damage alone.
“North Atlantic hurricane risk continues to be a principal driver of total annual losses with storm surge contributing a high proportion of those losses. Our extensive post-Sandy claims data analysis revealed that basement-level property and contents damage contributed to a higher proportion of overall losses than previously expected, especially for commercial structures in central business districts,” said Grant.
In addition, he said risk differentiation has been sharpened as a result of updates to the vulnerability components across multiple lines of business and countries following a reanalysis of claims data from the 2004 and 2005 hurricane seasons, as well as changes in building codes and regulations.
Updated Software and Geocoding
The Europe windstorm and the North Atlantic hurricane model suites have been released on RMS RiskBrowser 15.0 and RiskLink 15.0, which includes an updated geocoding engine to improve the geocoding quality and resolution for all countries impacted by North Atlantic hurricanes, as well as some non-modeled countries.
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