Enhanced Model Reflects Medium-Term View of Hurricane Activity and Latest
Understanding of Building Vulnerability
NEWARK, Calif., May 22 /PRNewswire/ -- Risk Management Solutions, Inc
(RMS), the world's leading provider of products and services for the
management of catastrophe risk, today launched the latest version of the
RMS(R) U.S. Hurricane Model, the first catastrophe risk model to explicitly
incorporate a five-year forward-looking view of hurricane frequency. The
new model also reflects extensive claims research and analysis of building
performance, as well as an expanded methodology to assess amplified losses
that can occur in severe catastrophes such as Hurricane Katrina.
RMS launched its new model with version 6.0 of its RiskLink(R) and
RiskBrowser(R) risk management platforms. Version 6.0 includes updates to
the U.S. and Caribbean Hurricane models, Eastern U.S. and Eastern Canada
Earthquake models, and a Europe Windstorm model. The new models were
introduced on May 9-12 at the 2006 RMS Client Conference in Colorado
Springs, Colorado. The largest gathering of catastrophe risk modeling
professionals in the industry, the conference was attended by more than 500
insurance and reinsurance industry representatives.
The updated RMS U.S. Hurricane model provides a new view of hurricane
frequency in the Atlantic Basin that explicitly represents risk based on a
'medium-term' (five-year) forward-looking view. RMS believes that hurricane
risk over the next five years is best represented by landfalling hurricane
activity rates that are higher than the long-term historical average.
Higher hurricane activity in the Atlantic is strongly linked to increased
sea surface temperatures, and is likely to persist for at least the next
five years, as determined by extensive RMS research on climate variability,
climate change, historical hurricane activity patterns, and hurricane
clustering research. RMS assembled a panel of leading hurricane
climatologists in October 2005 to confirm this new view of risk, and plans
to repeat the process annually in order to review and assess the latest
conditions and state of hurricane activity research.
After the 2004 and 2005 hurricane seasons, RMS embarked on a major
research initiative involving the collection and analysis of claims and
exposure data. This effort resulted in the creation of the world's largest
compilation of high-resolution hurricane claims, from which RMS extracted a
considerable amount of important and previously unavailable knowledge
relevant to risk modeling.
The RMS U.S. Hurricane model combines advanced modeling techniques with
in-house research on storm behavior and building, contents, and time
element vulnerability to accurately simulate the potential range of damage
an insurer can expect to experience due to a hurricane event. Wind and
storm surge losses are calculated using enhanced vulnerability assessment
facilitated in large part by the collection of $13 billion in insurance
claims data from the 2004 and 2005 hurricane seasons, as well as new
analytical assessments of building performance.
"These simultaneous analysis efforts have significantly improved the
accuracy of risk assessments by allowing for greater differentiation and
more precise estimation of various classifications of hurricane risk,"
stated Phil LeGrone, director of claims research at RMS.
The hurricanes of 2004 and 2005 have also provided new insights into
the amplification of insured losses in severe catastrophes due to economic
causes beyond wind and water damage, explains Dr. Robert Muir-Wood, chief
research officer at RMS: "Hurricane Katrina has prompted further research
and understanding on how one high-impact event can create a cascade of far
more damaging consequences. A whole new tier of economic, behavioral, and
systems- based modeling is required to predict the losses in such Super
Catastrophes."
The new U.S. Hurricane model incorporates this cutting edge research,
assessing factors such as economic demand surge, claims adjustment and
inflation, the economic impact of reconstruction, and cascading
catastrophes that can occur in major metropolitan areas.
Version 6.0 is the most significant release from RMS to date, with
major initiatives that include:
-- New versions of the RMS Eastern U.S. and Eastern Canada earthquake
models, and the Europe Windstorm model to reflect 3rd generation
modeling techniques
-- Enhancements to the RMS Offshore Platform model, for assessment of
risk to offshore oil and gas platforms in the Gulf of Mexico, as well
as updated storm surge modeling for the U.S. and a new storm surge
model for the Caribbean
-- New capabilities for underwriting and managing risk due to California
Wildfires
-- Upgrades to the RiskLink(R) and RiskBrowser(R) software platforms that
enable the models to incorporate new features requested by users
About RMS
Risk Management Solutions, Inc is the world's largest leading provider
of products and services for catastrophe, weather, and enterprise risk
management. More than 400 leading insurers, reinsurers, trading companies,
and other financial institutions rely on RMS models to quantify, manage,
and transfer risk. Founded at Stanford University in 1988, RMS serves
clients today from offices in the U.S., Europe, Japan, and Bermuda. For
more information, visit our web site at http://www.rms.com.
RMS, RiskLink, and RiskBrowser are registered trademarks, and the RMS
logo is a trademark of Risk Management Solutions, Inc. All other trademarks
are property of their respective owners.
Editorial Contacts:
Mark Prindle
TorranceCo, New York
1-212-691-5860
mprindle@torranceco.com
Shannon McKay
RMS, California
1-510-505-3257
shannon.mckay@rms.com
SOURCE Risk Management Solutions, Inc
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Related links:
http://www.rms.com/
CONTACT:
Mark Prindle of TorranceCo, New York,
+1-212-691-5860, mprindle@torranceco.com; or Shannon McKay of
RMS, California, +1-510-505-3257, shannon.mckay@rms.com
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