New Florida hurricane model by Aon offers alternative view of risks
Re/insurance broker has launched a new Florida hurricane model as it seeks to offer insurers an alternative view on their risks without being restricted to just one catastrophe model.
Aon said the new model brings together the latest research and technology to provide insurers with an additional view of risk when submitting Florida rate filings. It has been certified by the Florida Commission on Hurricane Loss Projection Methodology (FCHLPM) for ratemaking in the state.
The model incorporates a range of wind mitigation options and secondary building characteristics which insurers can use to develop refined views of risk, reflecting portfolio-specific risk appetites and underwriting approaches.
Model results incorporate regional variations in building code requirements and construction practices which have been extensively validated using claims data contributed by Aon’s clients. The model also features an event set that calculates wind hazard during the entire lifecycle of each simulated hurricane, allowing for variations in hurricane intensity that are associated with varying ocean temperatures.
Additionally, insurers can also use the new model to develop a bespoke view of risk to shape underwriting, portfolio management and reinsurance purchase decisions.
Adam Podlaha, head of Impact Forecasting at Aon, said: “The state of Florida is no stranger to tropical cyclone risk – from 2016 to 2020 alone, the state recorded eight named storm landfalls, including three striking at hurricane intensity. These landfalls, plus impacts from non-landfalling storms, have resulted in public and private insured losses in Florida of nearly $40 billion during this period.”
George deMenocal, CEO of US Reinsurance Solutions, added: “ Aon actively engages with re/insurers that write Florida business to evaluate alternative views, identify and quantify uncertainty, and customise their view of risk. Our new Florida hurricane model will be instrumental in this process and demonstrates our continuing commitment to enhancing the understanding of this peril and helping clients navigate new forms of volatility.”
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