Florida Commission on Hurricane Loss Projection Methodology Approves AIR Worldwide V12 Model; Randy Dumm Re-Elected as Chair

AIR Worldwide Corporation’s Atlantic Tropical Cyclone Model Version 12.0 officially was approved by the Florida Commission on Hurricane Loss Projection Methodology (“FCHLPM”) under the 2009 Standards to Determine Acceptability at its June 8, 2010 meeting.  

During their presentation, AIR Worldwide representatives discussed new aspects of the Version 12 model.  These include:

• Measure of surface roughness and influence of wave action through new United States Geological Survey land use and land cover data;
• Evolution of the radius of maximum wind (“Rmax”) based on high-resolution radar data;
• Windspeed validation due to availability of robust validation data;
• Measurement of Rmax vertical slant and validation with height;
• Regional damage functions (for underspecified structure types) based on regional inventory distributions;
• Impact of individual risk features;
• Relationship between building and time element damage functions;
• The relationship of renters and condominiums to building and contents damage functions;
• Explicit modeling of the evolution of building codes and their enforcements;

AIR representatives stated that, according to the new model, the Florida industry loss changes at county level are small; however, regional and local changes are more significant.  Overall, coastal wind speeds are reduced, while inland wind speeds are increased; personal residential vulnerability is stable and commercial residential vulnerability is increased.

The representatives further indicated that changes across all regions, all lines of business and all building types were reconciled to the specific model updates.

A summary of average annual zero deductible statewide loss costs for each model component change follows:

• Event generation module – 3.67 percent
• Windfield model -14.72 percent
• Damage functions +25.91 percent
• ZIP Code database + 0.18 percent
  • Total + 4.08 percent

To view the FCHLPM Professional Team On-Site Review Report, click here.  To view AIR’s presentation, click here.

After AIR’s presentation, FCHLPM Chairman Randy Dumm reviewed the recent passage of HB 7119, which, as of October 1, 2010, re-enacts Florida’s public record and public meeting exemptions for the FCHLPM and requires a recording to be made of any closed portion of an FCHLPM meeting at which confidential and exempt trade secrets are discussed. The bill expands the current exemptions to protect recordings of closed meetings and extends the repeal date from October 2, 2010, to October 2, 2015.  

With the passage of HB 7119, a public necessity statement was added to the existing statute to state that the release of the aforementioned recorded portions of an FCHLPM meeting, or of a rate proceeding on an insurer’s rate filing at which confidential and exempt trade secrets are discussed would compromise the deliberations that took place during the closed meeting and would negate the public meetings exemption.   Further, while current law already provides a public records exemption for trade secrets, the statement clarifies that the release of recordings generated during those closed portions of meetings would compromise the current protections already afforded to trade secrets.

Before the conclusion of the June 8 meeting, the FCHLPM approved the recommendation of Scott Wallace as incoming Vice Chair and Randy Dumm as incoming Chair. 

Should you have any questions or comments, please contact Colodny Fass.

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