EQECAT Issues U.S Hurricane Model Challenge

April 26, 2005

Richard Clinton, president of Oakland Calif.-based EQECAT, a leading authority on extreme-risk modeling, announced an initiative aimed at comparing its models of the 2004 hurricane events for Florida exposure against the estimates generated by other models.

“We are so confident in the ability of the EQECAT model to predict 2004 hurricane losses more accurately than other models, that if we fail to do so in the comparison test, the analysis is free, “Clinton stated. ” We think that insurers deserve better model performance than they experienced in 2004 and we’ll put our money where our mouth is to prove that EQECAT is a better model. The 2005 hurricane season is almost here, so it is a perfect time for insurers to know their exposure,” he added.

Clinton noted that the “aftermath of the 2004 hurricane season continues to impact the industry. Some primary insurers were disappointed with their catastrophe model loss estimates for the four hurricanes affecting Florida in 2004. Some Insurers sustained larger than expected losses due to failure of their models to accurately predict loss levels for the four storms, particularly for commercial exposures,” he stressed.

“Insurers also have been reported to say that they were caught off guard by the impact of having four retentions,” Clinton noted. “This highlights the need for models to help users to manage annual aggregate exposures, as well as individual event ‘per occurrence’ exposure. Both issues raise the possibility of deficiencies in some of the catastrophe models insurers have become so dependent upon.

“We believe that EQECAT provided significantly better loss estimates than other hurricane models, and better capability to understand the potential impact of multiple events. These are advantages that we can demonstrate and that have significant importance to insurers.”

EQECAT said the “2004 Hurricane Challenge offer is for any direct property writer having commercial and/or residential property premiums of $30 million or more in Florida.

For more information about the EQECAT Hurricane Model Challenge please contact EQECAT at (510) 817-3101 or Solutions@EQECAT.com.

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