AIR Worldwide Hurricane Model Gains Fla. Approval

The Florida Commission on Hurricane Loss Projection Methodology has for the ninth consecutive year certified AIR Worldwide Corporation’s 2005 U.S. Hurricane Model. To be used by insurers for residential rate filings, the state requires hurricane models to be certified on an annual basis.

AIR updated its hurricane 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.

“The 2004 hurricane season has again demonstrated the robustness of AIR catastrophe models and their value to the insurance industry,” David Lalonde, AIR senior vice president commented. “The AIR model provides an objective, scientific platform from which insurers can effectively manage hurricane risk.”

According to Lalonde, AIR recently enhanced its hurricane model to give insurers the ability to better manage the risk of multiple-event seasons. AIR’s model now 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.

AIR Worldwide Corporation (AIR) is a risk modeling company helping clients manage the financial impact of catastrophes and weather.

Topics Catastrophe Natural Disasters Hurricane