Reinsurance (February 01, 2010)

NEAR-TERM MODELS ARE OVERESTIMATING INSURED DAMAGES: KAREN CLARK

Near-term models designed to project insured losses from Atlantic hurricanes in the United States have significantly overestimated losses for the cumulative 2006-09 seasons, a Karen Clark release says.

Three major catastrophe modellers introduced near-term models in 2006 following the destructive 2004 and 2005 hurricane seasons.

Actual cumulative insured losses in 2006-09 totalled $13.3 billion.

But assuming long-term average annual insured hurricane losses of $10 billion per year, estimates provided by AIR Worldwide (AIR), EQECAT and Risk Management Solutions (RMS), initially projected insured losses for 2006-09 at $48.8 billion (AIR), $54.5 billion (EQECAT) and $54.6 billion (RMS), respectively, Karen Clark & Company said in a press release.