New Report Examines '04 Multi-Event Season
By Steve Tuckey
NU Online News Service, Jan. 13, 3:10 p.m. EDT?A modeling firm said today it has produced a new white paper that will help insurers face the underwriting challenges of future hurricane seasons where frequency rather than severity is the main feature.[@@]
The Boston-based AIR Worldwide Corp. study includes a detailed explanation of how insurers can explicitly account for the probability of multiple events in a single year. It also includes a case study that demonstrates techniques insurers can use to manage risk of multiple events and multiple years.
"With four hurricanes impacting Florida this past season, many companies will likely change their catastrophe risk management strategies to recognize the potential for multiple catastrophes in a single year," said AIR spokesman Mike Gannon.
The report comes as the industry examines the significance of the first time in a century that four major hurricanes have hit one state in a year.
Willis Group Holdings chairman Grahame Millwater in his annual report said the frequency hit ceding companies relatively hard since they retained a significant portion of the losses.
"However, these claims did influence reinsurers' attitude to pricing, and expectations of wholesale price reductions were quickly dampened for loss hit programs that saw increased rates," Mr. Millwater said.
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