Florida Commission on Hurricane Loss Projection Methodology June 21 Meeting Recap

The Florida Commission on Hurricane Loss Projection Methodology (“FCHLPM”) met on Thursday, June 21, 2007 to continue its model acceptability review process.  To access a copy of the meeting agenda, click here.  The meeting notice is available by clicking here.

Carried forward from the FCHLPM May 10-11 meetings were the RMS Model 6.0a and the Florida International University Public Model 2.6 presentations. 

Upon opening of the June 21 meeting, Florida Insurance Consumer Advocate and FCHLPM Commissioner General Bob Milligan immediately stated his concern that the models are drawing a great deal of public, legislative, media and insurance industry attention.  General Milligan said that he not only received improper meeting notice, but that the June 21 meeting materials arrived far too late to afford appropriate time for thorough preparation and review.  The FCHLPM, he said, cannot take the chance of being perceived by those scrutinizing the process as “all form and no substance” because of bad decision-making parameters.

General Milligan also pointed out that today’s presentations differed from those the FCHLPM had seen and heard previously.  With apologies to professional teams and staff in attendance, he then made a motion to postpone review of the Florida Public Model until the Commission had taken more time to review the materials.  The motion to delay review of the Florida Public Model passed, although not unanimously. 

It was also noted that the Commission did not have an opportunity to review the first model submission by RMS because it was replaced by a second version (6.0a).  The afternoon portion of the June 21 FCHLPM meeting focused on the acceptability of the RMS Model. 

Some of the discussion included the concern that insurance companies might attempt to use the default curves in the model as a loophole to overestimate housing losses, rather than showing new information on updated housing stock that reflectes repairs, mitigation and strengthening measures taken since 2004-2005.  Studies have shown, it was commented, that a completely mitigated home sustains 60% less damage than one which is not protected.

Concern was also raised about claims data being used to calibrate vulnerability in ground-up losses. The Commission felt that using a model without a deductible was unrealistic, and could also be used by insurance companies as a loophole to obtain a higher loss result. 

After discussion, the Commission found the RMS Model to be acceptable under all standards. 

Commissioner Howard Eaglefeld made a motion to reduce potential future confusion by amending the notice of acceptability to request that the modeler (RMS) always include the trade name and version number of the model (6.0a versus 6.0). 

The Commission determined that it would leave the responsibility for differentiating the two models up to RMS.

To see a list of FCHLPM Commissioners, click here.

Tentative new FCHLPM meeting dates of August 15, 16 and 17 were set, during which the Florida Public Model will be reviewed for acceptability and workshops will be held.  Representatives from this office will attend the meetings and provide updates on the proceedings.

Should you have any comments or questions, please do not hesitate to contact this office.