Aon, a renowned global professional services firm, has received certification from the Florida Commission on Hurricane Loss Projection Methodology for the latest update to its Impact Forecasting Florida hurricane model.
This certification allows the model to be utilised for ratemaking purposes in the state. The enhanced model incorporates cutting-edge research and technology to provide insurers with a comprehensive and customisable view of risk for ratemaking in Florida.
The updated Florida hurricane model leverages the most recent historical hurricane records (HURDAT2) and sea-surface temperature data, enabling insurers to precisely tailor their assessment of risk.
It offers a detailed analysis of regional vulnerability, considers the impact of wind mitigation measures and secondary building characteristics on individual risks, and accounts for uncertainties in an evolving climate.
The model’s vulnerability component has been rigorously validated using extensive claims data from recent hurricane seasons, reflecting variations in building code requirements and compliance practices, including Law & Ordinance assumptions.
One of the notable features of the model update is its event set, which calculates wind hazard throughout the entire lifecycle of each simulated hurricane. This capability accommodates variations in hurricane intensity linked to varying ocean temperatures.
Insurers now have the means to navigate potential volatility and enhance both their business resilience and comprehension of loss drivers. This empowers them to effectively manage unique portfolios, transfer risk efficiently, and optimise capital.
Aon is also providing clients with full transparency into the underlying assumptions, data, and inputs that drive their Florida hurricane model.
Adam Podlaha, head of Impact Forecasting at Aon, emphasised the significance of the new model: “Hurricane Ian caused an economic loss of more than $95 billion and an insured loss of approximately $50-55 billion. Aon actively engages with insurers that write Florida business to evaluate and customize their view of risk, support the ratemaking process and quantify uncertainty. Our new Florida hurricane model will be instrumental in this process and demonstrates our continued commitment to enhancing the understanding of this peril to help shape better business decisions.”
