Florida Commission on Hurricane Loss Projection Methodology Meeting Report: March 19

The Florida Commission on Hurricane Loss Projection Methodology (“Commission”) met in Tallahassee on Thursday, March 19, 2009, to address potential issues and deficiencies in recent hurricane loss projection model submissions made under the 2008 standards.  Concerns that were previously identified with these models had been submitted for discussion by the Commission’s Professional Team following a meeting on Thursday, March 12.  To view the meeting agenda, click here.

The purpose of both meetings was to help the Commission and modelers prepare for on-site visits to modelers, which begin at the end of March 2009. 

At the March 19 meeting, it was determined that the Professional Team will issue pre-visit letters to each modeler that contain specific questions and issues to be addressed while the Professional Team is on-site.  Following the on-site visits, which are expected to last until the end of April 2009, the Professional Team will submit reports listing corrections to be made in the model submissions prior to final Commission review.

Five modelers/models are being reviewed:

• AIR Worldwide Corporation–Atlantic Tropical Cyclone Model V11.0
• Applied Research Associates, Inc.–HurLoss Version 4.2
• EQECAT, Inc.–Florida Hurricane Model 2009
• Florida Public Hurricane Loss Model 3.1
• Risk Management Solutions, Inc.–RiskLink 8.0.1a

The only potential issue identified by the Professional Team is that all modelers must present a description on how the model incorporates the number of stories a building has in the vulnerability functions.

The Professional Team also identified each modeler’s unique, potential deficiencies that will need to be addressed.  To view a complete list of these concerns, click here.

All of the modelers’ submissions were deemed sufficient and were passed by the Commission in subsequent votes under each one of the standards: (1) General; (2) Meteorological; (3) Vulnerability; (4) Actuarial; (5) Statistical; and (6) Computer. 

While the deficiencies of the Applied Research Associates, Inc. (“ARA”) — HurLoss Version 4.2 Model were being discussed and voted upon, Florida Office of Insurance Regulation Actuary Howard Eaglefeld mentioned that ARA modelers had, in fact, brought to the Professional Team’s attention to some deficiencies in their submission.  After the March 12 review, ARA itself, had realized its model’s deficiencies and sought to correct them prior to the scheduled April on-site visit.

Mr. Eaglefeld also addressed e-mails he received regarding the ARA model and disclosed that those e-mail communications were in violation of Florida’s Sunshine Laws pertaining to public meetings and public disclosures.  Although ARA’s submission was ultimately approved and deemed adequate, it did not pass unanimously.

Mr. Eaglefeld voiced his opinion that the ARA model submission deficiency was too fundamental, and by deeming the submission adequate, as well as accepting revisions to the submission up to the time of the on-site visit, the Commission essentially circumvented the submission deadline by obviating the need for a meeting to determine whether submissions adequately address issues and deficiencies to be examined at on-site visits.

The Risk Management Solutions, Inc. (“RMS”) — RiskLink 8.0.1a model submission passed unanimously following a very brief discussion about its Form M-2 (on page 133 of the submission) pertaining to “maximum windspeed locations not being plotted on maps in Figure 15.”  Brief discussion also took place regarding this model’s application of the Commission’s meteorological standard.

Mr. Eaglefeld drew attention to an RMS table (page 135) in which there seems to be a discontinuity in the drop between 960 and 970 millibars that no one could quite explain.

The on-site visits are scheduled for the following dates:

• March 31-April 2, 2009:  AIR Worldwide Corporation–Atlantic Tropical Cyclone Model V11.0 (“AIR”)
• April 8-10, 2009:  Applied Research Associates, Inc.–HurLoss Version 4.2
• April 13-15, 2009:  EQECAT, Inc.–Florida Hurricane Model 2009
• April 16-18, 2009:  Risk Management Solutions, Inc.–RiskLink 8.0.1a (“RMS”)
• April 27-29, 2009:  Florida Public Hurricane Loss Model 3.1 (“FPM”)

Commission Member requests for on-site visits were approved by a vote. The following Commissioners were approved for the modelers indicated below:

• Kristen Bessette–AIR and FPM
• Howard Eaglefeld–AIR and FPM
• Scott Wallace–FPM
• Hugh Willoughby–RMS
• Randy Dumm–FPM

Before concluding, Florida Hurricane Catastrophe Fund Senior Attorney Tracy Allen briefly reviewed the legal and ethical responsibilities of the Commission members when conducting on-site visits.

Commission meetings to review the models for acceptability are scheduled for May 19-21, 2009.

 

Please note that the material above is a brief summary of the discussion and events that took place during the meeting of the Florida Commission on Hurricane Loss Projection Methodology (“Commission”).  It is not intended to be a comprehensive review of any particular issues relating to the policies and/or issues discussed.  Further, this report should not be relied upon for making any specific decisions.  Should you have any questions about any of the above matters, please do not hesitate to contact this office.  Colodny Fass will continue to follow this and other issues related to actions taken by the Commission in regard to this and other matters, and provide information on, and analysis of, those issues and events as they arise.

 

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