RMS releases major upgrade to its U.S. hurricane model

Risk Management Solutions (RMS) has released a “major” upgrade to its U.S. hurricane model.
The latest version of the model incorporates 10 times more onshore and offshore wind observation data since the last hazard update in 2003. Also, it incorporates the forensic analyses of more than $18 billion of claims data for the past 20 years, as well as detailed engineering research. In particular, research after Hurricane Ike in 2008 has provided insights into building performance, an RMS release says.
As a result of the model changes, RMS expects to see wind risk increase for all hurricane states on an industry-wide basis.
“Coupled with the wind model, the storm surge model simulates the build-up of storm surge and wave action in the open sea, and links the two as a storm changes in intensity, size and speed, as we saw with hurricanes Katrina and Ike,” said Dr. Claire Souch, RMS’s vice president of natural catastrophe and portfolio solutions.
As a result of the model changes, RMS expects to see wind risk increase for all hurricane states. On a wind-only basis, portfolios concentrated along the coast will show the smallest increase in wind losses and may even decrease in some regions.
Portfolios consisting of non-coastal exposure and commercial or industrial business will generally show the largest increases, the release says.
Changes in loss results in the portfolios analyzed by RMS typically range between +20% and +100%.