Fla. Recertifies Hurricane Loss Projection Methodology

May 11, 2007

The Florida Commission on Hurricane Loss Projection Methodology (FCHLPM) has recertified EQECAT Inc.’s hurricane model for use in Florida according to EQECAT.

The EQECAT North Atlantic Hurricane model, a probabilistic model designed to estimate potential damage and insured losses due to hurricanes in the mainland United States, the islands of the Caribbean, the Bahamas, and Bermuda, met all the requirements established by the FCHLPM, including those concerning vulnerability, validation, computing, statistics, and the actuarial use of modeled loss costs.

The model was released commercially in late 1995 and is used by primary insurers and reinsurers, as well as financial institutions and intermediaries for portfolio management, pricing, and risk transfer planning.

“The recertification success of EQECAT’s model is attributable largely to our ongoing dedication to making enhancements to meet the specific needs of the insurance and reinsurance community,” said Rick Clinton, president of EQECAT.

“When we enhance our model, we focus specifically upon the consistent representation of risk across the North Atlantic basin; the appropriate per-occurrence loss exceedance curve based on climatologically reasonable hurricane tracks and parameter histories; and the appropriate spatial correlation of loss,” Clinton said.

In addition to its long-term hurricane model, provided to the FCHLPM and clients, EQECAT offers to clients a supplemental “near-term” hurricane loss estimation view which provides the prospective hurricane risk presuming higher hurricane activity than the historical average. EQECAT’s “near-term” view is based upon a stratified set of historical data consistent with a “warm” Atlantic Multi-Decadal Oscillation cycle. The “near-term” view was not part of the certification process.

Source: Business Wire

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