Risk Management Solutions (RMS), a specialist in the area of natural hazard risk modeling, announced the most recent release of its U.S. and Canada Tornado/Hail models for use with RiskLink®-DLM and ALM® catastrophe modeling platforms. These model upgrades provide the most complete tools on the market for studying and transferring the risk associated with tornado and hail events in North America.
Culminating a two-year development effort by RMS scientists and engineers, the models contain a set of over 48,000 tornado and hail events. Developed with specific focus on simulating intense events in metropolitan areas, the models analyze risk at a higher level of resolution in areas of greater risk and exposure concentration. Results were validated extensively with individual historical events dating back to 1896 and average annual loss data dating back to 1950.
According to Dr. Robert Muir-Wood, managing director of global risk modeling at RMS, the new Tornado/Hail models are planned to meet the growing demand for efficient and accurate assessments of tornado and hail risk, particularly for events that affect major metropolitan areas where exposure is often greatest. Muir-Wood added that the difficulty of modeling these hazards has required some major new research in understanding the structure of multiple thunderstorm outbreaks that control the pattern of tornado tracks and hailstreaks on the ground. The final models are great demonstrations of mature third-generation catastrophe modeling, constructed to solve the real-world underwriting and portfolio management problems of U.S. and Canadian insurers, efficiently and accurately.
According to Steve Peck, vice president and actuary at EMC Insurance Companies, a major insurer in the central U.S. where tornado and hail risk is of great interest, these models and their enhancements will work as a valuable tool in analyzing the potential loss exposures associated with tornado and hail damage within areas most susceptible to these risks.
The high frequency and geographic breadth of these risks in the U.S. and Canada result in insured losses of approximately $5 billion annually. The model notes that the 100-year industry loss from an individual event in the U.S. exceeds $3 billion. Tornado and hail can also have a significant impact on the Canadian insurance markets, as experienced when insured losses reached C$343 million in the September 1999, Calgary, Alberta Hailstorm.
The RMS(TM) U.S. and Canada Tornado/Hail models are available for use with RiskLink®-DLM and ALM®, RMS’s market-leading catastrophe modeling software applications, used by primary insurers, brokers, and reinsurers worldwide.
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