Boston - A winter storm model for the U.S. that captures the effects of wind, precipitation, and freezing temperatures on insured properties should help insurance companies assess winter storm risk, according to AIR Worldwide Corp. (AIR), a Boston-based member of the ISO family of companies.
Developed to address the fact that the loss history of most insurers is too brief to reasonably estimate the likelihood of the most extreme losses from winter storms, the model provides insurers with a scientifically based assessment for effective risk management.
"Until now, estimating likely losses from winter storms has been very challenging," said John DeMartini, Towers Perrin principal and senior vice president of their reinsurance business. "With the release of AIR's new model, we will be able to incorporate a scientific assessment of winter storm risk into our actuarial analyses, similar to other perils, to help our clients make better reinsurance purchasing decisions."
AIR's model explicitly accounts for the three drivers of winter storm loss: wind, precipitation, and temperature. The AIR model is based on numerical weather prediction (NWP), a technology that naturally captures the connection between these storm characteristics by dynamically modeling the physics of the atmosphere.
The AIR model covers the winter storm risk in its various manifestations across the entire continental U.S., including:
-- Nor'easters affecting the East Coast
-- Ice storms in the Southeast, South-Central, and Midwest states
-- Freeze conditions in the South-Central states
-- Windstorms along the West Coast
-- Lake and ocean effect snows along the Great Lakes and Eastern Seaboard
The AIR model accounts for regional design code differences that impact the vulnerability of properties to winter storms, the effects of cold temperatures that can burst pipes and cause damage to non-structural elements and contents, and drifting snow that can accumulate and cause roof collapse.
"Since 1990, winter storms have cost insurers almost $17 billion," said Dr. Peter Dailey, AIR manager of atmospheric science and architect of the new model. "AIR's winter storm model incorporates a number of new scientific techniques, including an innovative dynamic snow load model, to help insurers better assess and prepare for this significant risk."
AIR's winter storm model for the U.S. is available in Version 7.5 of its CLASIC/2(TM), CATRADER(R), and CATStation(R) catastrophe modeling systems, as well as for service-based catastrophe risk analyses.
Source: Business Wire
