The Hawaii Department of Commerce & Consumer Affairs, Insurance Division, has accepted Air Worldwide Corporation’s (AIR’s) 2001 Hawaii hurricane model for use in rate filings in Hawaii. This is the first year that Hawaii has issued official certification of catastrophe models for such use.
“The Hawaii Hurricane Relief Fund has relied on AIR modeling technology throughout its existence,” AIR senior vice president David Lalonde said. “Now that private insurance companies are once again writing hurricane risk in Hawaii, they too will increasingly rely on the results of AIR’s catastrophe models to price their risk.”
AIR’s Hawaii hurricane model, included in its CLASIC/2™ software, takes into account Hawaii’s volcanic topography, which can have a significant amplifying affect on wind speeds, and local construction practices unique to the Islands. Additionally, the model features fully probabilistic storm tracks along which storm parameters, such as central pressure, radius of maximum winds and forward speed, can vary. Thus the model realistically captures storms that intensify, weaken and reintensify along curving and recurving tracks, thus affecting different islands with different intensities.
The model can explicitly account for the presence of loss mitigation devices and features, such as storm shutters and hurricane straps, giving insurance companies the ability to price credits for policyholders who install such devices.
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