Risk Management Solutions (RMS) announced that the Florida Commission on Hurricane Loss Projection Methodology (FCHLPM) re-certified the RMS U.S. Hurricane model on all standards for use in establishing residential insurance rates in the state of Florida last week.
The RMS model passed all 48 standards set forth by the FCHLPM in its most recent Report of Activities, covering areas such as meteorology, vulnerability, validation, computing, statistics, and the actuarial use of modeled loss costs. This marks the sixth consecutive year that the RMS model has been certified by the FCHLPM.
The RMS U.S. Hurricane model was first released in 1993, and has undergone two significant upgrades, in 1997 and again in February 2003. This is the first complete review by the FCHLPM since the February 2003 release in RiskLink® 4.3 and RiskBrowser® 3.2.
The most recent release features a basin-wide methodology that simulates hurricanes throughout their lifetime, and a time-stepping directional windfield model, that calculates windspeeds at each site. The model is implemented in RMS’ proprietary Variable Resolution Grid (VRG). The VRG operates at a resolution that is 10 times more detailed than ZIP Codes, using the highest modeling resolution in areas of high exposure and high hazard gradient such as coastal areas and major cities. The model has been calibrated with more than $7 billion of insured loss data.
The RMS model is also the first of its kind to include the transition of hurricanes into extratropical cyclones. These transitioning storms exhibit different characteristics from pure hurricanes. They occasionally impact the northern Gulf coast of Florida, but are particularly prevalent along the Atlantic coast of the U.S. north of Cape Hatteras.
Before being certified, all scientific, engineering, actuarial, technical and statistical components of the model were extensively reviewed by the FCHLPM. The FCHLPM also considered the opinions of the Professional Team, a panel of experts appointed by the FCHLPM to perform on-site audits of submitted hurricane models.
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