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RMS
Launches Unique Winterstorm Model and Severe Convective Storm Model for
U.S. and Canada
Newark, CA – August 14, 2008 – Risk Management
Solutions (RMS) has enhanced its suite of catastrophe risk models for
the U.S. and Canada by launching innovative new Winterstorm and Severe
Convective Storm models. Built to satisfy the needs of both
underwriters and risk managers, the models provide the insurance
industry with a more complete view of risk and increase RMS’ coverage of
natural catastrophe risk in North America to as much as 90%.
The RMS® U.S. and Canada
Winterstorm models explicitly assess losses from snow, ice, freezing
temperatures, and extra-tropical winds. “Winter storms are complex
weather systems that can produce various types and combinations of
damage from different perils, making them extremely challenging to
model,” commented Tom Foster, product manager at RMS. “Using a unique
approach, we have broken new ground by analyzing the individual and
combined impacts of snow, ice, freezing temperatures, and wind to
provide much more accurate damage estimates.”
He added: “In the last few decades
alone, a number of winter storms have torn across areas of North America
and caused substantial property damage, hitting both the primary
insurance and reinsurance sectors. We calculate that if the 1993 Superstorm that descended on the eastern half of the U.S. were to
reoccur today, for example, insured losses could reach $5 billion,
mainly from the heavy snowfall and strong winds.” Winter storm damage
is estimated to account for around 10% of the total average annual loss
in the U.S. and Canada.
To model the full range of possible
future winter storms, RMS employs a unique "hybrid" approach that
combines the best of weather prediction modeling with statistical
techniques. This results in high-resolution simulations of new winter
storm events that are not limited by the relatively short historical
record of information.
RMS has produced a report that chronicles the meteorological
features of the 1993 Superstorm and the potential impact of the event should it
occur in 2008. The new U.S. Winterstorm Model is utilized to highlight the range
of insured losses from the perils of snow, ice, wind, and freezing
temperatures.
Severe Convective Storm
To complement its Winterstorm Models, RMS has also launched the new RMS®
U.S and Canada Severe Convective Storm models. Severe convective storms
produce damage from large hailstones, powerful straight-line wind gusts,
lightning strikes, and deadly tornadoes. Outbreaks range from the local
development of a single thunderstorm to large multi-day, multi-state
events causing insured losses that can spiral into the billions. It is
estimated that these storms have already resulted in more than $10
billion of insured losses this year.
The new models cover a broad
geographic area that encompasses the most active region of severe
convective storms globally, with the Midwest and Great Plains regions of
the U.S. and the Prairie Provinces and Ontario in Canada at greatest
risk. They have been rigorously tested using weather observation data,
such as radar interpretation, damage surveys and industry claims
information.
“Models that rely purely on a
catalog of past events tend to generate biased results, whereby the risk
for certain regions is under or over reported depending on the
historical record of catastrophes,” said Matthew Nielsen, product
manager at RMS. “Rather than just looking at different versions of
history, our new modeling approach allows us to capture the full range
of possible storm behavior across the U.S. and Canada and dissect the
geographical distribution of wind, tornado, and hail damage for each
event.”
The new models are being launched
alongside a set of new and updated RMS catastrophe models and software
with version 8.0 of the RiskLink® and RiskBrowser® modeling platforms
that are used throughout the insurance and reinsurance industry.
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