AIR Releases Updated Version of U.S. Terrorism Model

November 14, 2007

AIR Worldwide Corporation has released an updated version of its U.S. Terrorism Model, which is available in Version 9.5 of its catastrophe risk management systems. AIR said the new model is the result of “two years of research into the effects of conventional bomb blast in complex urban environments.”

The bulletin explained that “urban density can have a significant impact on the effects of a bomb blast,” which led AIR to enhance “its damage functions to account for the varying impact of bombs in relation to the density of properties in close proximity, to better reflect the local building environment for all locations in the U.S.”

Jack Seaquist, senior manager at AIR Worldwide, noted that the Model “can assist insurers in evaluating their terrorism risk and perform detailed loss analyses to identify high concentrations of potential loss in small areas such as city centers.” In addition it will enable “insurers to perform a fully probabilistic loss analysis that considers the full range of likely attack locations and weapon type combinations, estimates the losses and assigns an estimated probability to each level of loss.”

AIR also said it has updated the “injury loss distributions implemented in the model,” which now “reflect the latest research from the medical community regarding trauma from terrorist bomb blasts. The distributions take into account injuries that result from damage to the building (airborne debris and collapsing building elements), and the direct effects of overpressure waves. The injury loss data in the updated model uses state average claim costs by injury type based on the latest three policy periods of historical claims, as reported to the NCCI. Benefits were brought to their current levels and medical costs and wages were trended using regional indices.”

In conclusion AIR noted that the updated U.S. Terrorism Model “incorporates a greatly enhanced industry property exposure database. The updated database features more accurate building locations and building-specific characteristics for commercial properties. Physical attributes, such as number of floors, construction type, and wall type are incorporated by location. The property exposure database for residential properties features a significant increase in resolution.”

Seaquist explained that “as catastrophe models become more sophisticated and detailed, the exposures used as input to the models need to be more accurate and at higher resolution. This is particularly true for the terrorism model, where the effects of an attack can be highly localized and street address information, including the physical attributes of properties has become almost essential.”

The AIR U.S. Terrorism Model is available immediately in CLASIC/2™, CATRADER® and CATStation®. AIR also offers terrorism risk analyses for any country, on a service basis. For further information go to:

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