RMS fires back at report criticizing near-term hurricane models

Risk Management Solutions Inc. (RMS) disagrees with a report by competitor Karen Clark & Company (KC&C) suggesting that near-term hurricane models are ineffective.

KC&C had suggested near-term models, designed to project insured losses from Atlantic hurricanes in the United States for the five-year period ending in 2010, have significantly overestimated losses for the cumulative period.

Specifically, RIMS says in a release, the KC&C report “suggests the observed increase in annual storm frequency is largely attributable to improvements in observational technology, leading to better detection of tropical storms and hurricanes.”

RMS contends any bias existing in the completeness of the offshore record is accounted for in its model. “For all model parameters, RMS only uses data from sources or periods for which the associated dataset is considered complete and reliable,” the release says.

The KC&C report also questioned whether increased Atlantic hurricane activity translates into a higher number of landfalls, referring to this as the “hurricane paradox.”

RMS acknowledges this question remains open.

“The number of hurricanes that actually make landfall in any particular year is largely driven by the prevailing steering currents over the Atlantic Basin,” a RIMS release states.

“Although the U.S. did not experience a direct hurricane landfall in 2010, the higher basin frequency did translate into higher landfalls in the region: three hurricanes made landfall over the North American continent, while the Caribbean was impacted by two hurricanes and Canada by one hurricane.”

RMS argues that higher sea surface temperatures in the Atlantic increase hurricanes frequency and intensity. “Although opinions differ on whether this is due to natural cycles of variability or man-made climate change, there is scientific consensus that the proportion of intense hurricanes (Category 3-5) has increased and that since 1995 overall hurricane frequency has been significantly higher than the long-term historical average.”