FLORIDA COMMISSION ON HURRICANE LOSS PROJECTION METHODOLOGY HOLDS MEETINGS

The Florida Commission on Hurricane Loss Projection Methodology (“Commission”) held Committee Meetings and a Meeting to Review Model for Acceptability in Tallahassee, Florida on August 15, 16, and 17, which a representative from this office attended.  The Commission held Committee meetings during the first two days.  On August 17, 2007, the Commission approved the public model.  Below is a brief review of the activities which took place during the three-day meetings.

Meteorological Committee Chairman, Hugh Willoughby opened the meeting with a discussion on general hurricane information.  He described the anatomy of hurricanes and provided an overview of hurricanes and their relationship with global climate changes.    

Model Presentations

Three private modeling companies discussed their modeling processes.  The Risk Management Solutions, Inc. discussion included the scientific evidence for climate change, the implications of climate change in occurrence and intensity of Atlantic hurricanes, the use of long-term baseline in comparison to a short-term baseline of Atlantic hurricanes and other scientific matters.  Next, AIR Worldwide Corporation provided a physical and statistical analysis of their model.  The physical analysis involved discussion on the genesis, duration and steering of hurricanes.  The statistical analysis involved discussion and comparison on SST signals in Florida and the Southeast.  Finally, the EQECAT presentation focused on long-term and short-term views of risk.

Committee Meetings

Following the risk modelers’ presentations, the Commission’s Committees met and discussed changes to the standards and forms within their purview.  The following paragraphs briefly describe the areas which were reviewed during the particular Committee meetings.

The Meteorological Committee reviewed, discussed and revised standards and forms regarding the Base Hurricane Storm Set, Hurricane Parameters and Characteristics, Hurricane Probabilities, Hurricane Windfield Structure, Landfall and Over-Land Weakening Methodologies, and Logical Relationships of Hurricane Characteristics.

The General Standards Committee reviewed, discussed and revised standards and forms regarding the Scope of the Computer Model and Its Implementation, Qualifications of Modeler Personnel and Consultants, Risk Location, and Independence of Model Components.  It was noted that an all or nothing approach to modeling (i.e., focusing only on short-term or long-term baselines) could pose a barrier to innovation.  Several updates and changes were made by the Committee on the standards discussed.

The Vulnerability Standards Committee reviewed, discussed and revised standards and forms regarding the Derivation of Vulnerability Functions and Mitigation Measures. 

The Actuarial Standards Committee reviewed, discussed and revised standards and forms regarding the Modeled Loss, Underwriting Assumptions, Loss Cost Projections, Demand Surge, User Inputs, Logical Relationships to Risk, Deductible and Policy Limits, Contents, Additional Living Expenses, and Output Ranges.

The Statistical Standards Committee reviewed, discussed and revised standards and forms regarding the Modeled Results and Goodness of Fit, Sensitivity Analysis for Model Output, Uncertainty Analysis for Model Output, County Level Aggregation, Replication of Known Hurricane Losses and Comparison of Projected Hurricane Loss Cost standards. 

The Computer Standards Committee reviewed, discussed and revised standards and forms regarding the Documentation, Requirements, Model Architecture and Component Design, Implementation, Verification, Model Maintenance and Revision and Security.

Meeting to Review Public Model for Acceptability

On August 17, 2007, the Commission held a meeting to review the public model for acceptability.  Dr. Shahid Hamid provided a review of the Florida Public Hurricane Loss Model 2.6.  In his opening comments, Dr. Hamid noted that the source code will not be open, but would be available upon request.  The Commission reviewed the public model standards and discussed some of the differences between Model 2.6 and the previous models that were not approved.  Following a review and discussion of the all public model standards, the Commission voted to approve them and the public model. 

For your review, we have attached the Agenda of the three day meetings.  The Commission will hold its next meeting on September 20 and 21, 2007.

 

The above information is intended to be a brief summary of the activities that took place during the Committee Meetings.  It is not intended to be a comprehensive analysis of the matters contained herein.  Should you require additional information, please feel free to contact this office.