RMS® Hurricane Model Re-Certified by Florida Commission

Newark, Calif. – June 25, 2007 – Risk Management Solutions (RMS) announced today that the Florida Commission on Hurricane Loss Projection Methodology (FCHLPM) re-certified the RMS Hurricane model for use in establishing residential insurance rates in the state of Florida. The certified version estimates hurricane activity rates for the next five years based on a straight historical average of the number of hurricanes recorded since 1900, as required by FCHLPM standards.

This is the second version of the model that RMS submitted to the FCHLPM for review. The first uses RMS' forward-looking medium-term view of hurricane activity that has become the 'new average' since 1995, reflecting the increase in hurricane frequency and intensity being experienced in the Atlantic basin. Earlier this spring a review by the FCHLPM Professional Team indicated that the regulatory standards would not accommodate the RMS forward-looking medium-term view, so RMS withdrew this version of its model from the certification process, and re-submitted one based on the historical average. This version passed all standards set forth by the Commission in its most recent Report of Activities, covering meteorology, vulnerability, actuarial, statistics, computing and other general standards that apply to models used for developing residential insurance loss costs in Florida.

While the model based on the historical average can now be used for residential ratemaking in Florida, RMS continues to recommend that insurance and reinsurance companies assess and manage risk based on the standard medium-term rates included in version 6.0 and 7.0 of the RiskLink and RiskBrowser modeling platforms. The historical average does not distinguish well between periods of higher and lower hurricane frequency and significantly underestimates the current level of hurricane hazard along the U.S. coast, leaving insurers and their policy-holders more exposed than they believe.

Mitch Sattler, vice president of public policy at RMS commented: "Fundamentally, RMS is focused on providing an independent and accurate view of risk to ensure that insurers and their policy-holders can understand, manage, and mitigate it effectively."