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Hurricane Models Overestimate Activity

Claims News Service, Dec. 30, 12:54 p.m. EST -- A report on the performance of near term hurricane models finds that the models significantly overestimated U.S. losses from Atlantic hurricanes for the

By Patrick Stevenson | Updated on December 30, 2008

Claims News Service, Dec. 30, 12:54 p.m. EST — A report on the performance of near term hurricane models finds that the models significantly overestimated U.S. losses from Atlantic hurricanes for the cumulative 2006 through 2008 hurricane seasons.

Karen Clark & Company, a catastrophe risk management firm, analyzed near term models that were introduced in 2006 by the three major catastrophe modelers – AIR Worldwide (AIR), EQECAT and Risk Management Solutions (RMS). AIR initially predicted an overall annualized increase in hurricane losses of 40 percent above the long term average, but later lowered that figure to 16 percent in 2007. EQECAT predicted increases of between 35 and 37 percent, and RMS consistently predicted an overall increase of 40 percent above the long term average.

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