Information from Florida Office of Insurance Regulation re Public Hurricane Model 4/12/06
Jan 10, 2007
Please see the Press Release issued by the Florida Office of Insurance Regulation today regarding the Public Hurricane Model.
Please feel free to contact this office with any questions or concerns you may have.
PUBLIC HURRICANE MODEL ESTIMATES, LOSSES RELEASED
Tallahassee – A state financed public hurricane model used by the Office of Insurance Regulation to estimate storm losses came closer to actual losses from Hurricane Wilma than many private hurricane models.
– A state financed public hurricane model used by the Office of Insurance Regulation to estimate storm losses came closer to actual losses from Hurricane Wilma than many private hurricane models.
Estimates from the public model provided to the Legislature in November were within 2 percent of actual losses with an estimate of $7.049 billion, compared to estimated gross insured losses of approximately $6.903 billion in April. By way of comparison, private modeling firms provided estimates in late October of losses ranging from $2 to $12 billion.
In 2001, the Florida Legislature approved funding for a Public Hurricane Loss Projection Model to provide state regulators, consumers and insurers the opportunity to forecast how various assumptions about hurricane risk and possible losses can be factored into setting insurance rates.
The current model focuses on analysis of single-family homes, including manufactured homes. However, a large portion of existing Florida building stock corresponds to commercial buildings, including residential condominiums, office buildings, malls and industrial facilities. Many of these structures are in high-risk areas. The Office submitted a Legislative Budget Request for the 2006-2007 Fiscal Year to expand development of the model to include commercial residential structures, such as condominiums and apartment buildings.
The model was developed over four years in accordance with standards established by the Florida Commission on Hurricane Loss Projection Methodology and includes a Wind Model, a Vulnerability Model, an Insured Loss Model, a Damage Mitigation Component and a Computer Platform that contains appropriate hardware, system software, databases and application systems.
The public model was developed under a contract between the Office and Florida International University and is being used to assess hurricane risks and to estimate residential losses for specific sites, ZIP codes and regions of the state.
The cost for developing the public model was $2.7 million, far less than the $8 million to $15 million needed to develop a private model.
The public model was developed through a consortium of remarkable talent and expertise available within the state. FIU worked in conjunction with Florida State University, the University of Florida, Florida Institute of Technology, the University of Miami, the Hurricane Research Division of the National Oceanic and Atmospheric Administration and the National Institute of Science & Technology.