Applied Research Associate, Inc.’s latest version of HurLoss has once again been accepted by the Florida Commission on Hurricane Loss Projection Methodology (FCHLPM) for insurance rate making in Florida.
According to the ARA, this latest version is also the first time the firm has submitted a model with a current, or climate-conditioned, view of hurricane risk, rather than a stationary or long-term historical view, and the first model accepted by the FCHLPM to account for climate change.
Frank Lavelle, ARA Principal Engineer, who has managed the development and support of ARA’s hurricane model since 2002, commented, “This improvement recognizes the evolving nature of hurricane risk, which is driven by changing environmental parameters, such as sea surface temperature and wind shear.”
ARA suggested that its unique methodology makes this breakthrough in climate-conditioned modelling possible, allowing for direct input from leading Global Circulation Models (GCM).
Lavelle continued, “ARA’s engineering approach to catastrophe modelling is first principles, physics-based. Our hurricane model has always used physically based inputs, rather than relying solely on statistical modelling or simply claims data.”
ARA stated that its method of quantifying the effects of climate change on hurricane risk is to allow the hurricane model to ingest predictions of future global temperatures and wind shear from leading GCMs and provide event occurrence rates for any given time frame and carbon emissions scenario that has been modelled with a GCM.
Senior Engineer Lauren Mudd, ARA’s principal climate change expert with respect to the hurricane hazard, said, “Environmental parameters are direct inputs to ARA’s unique, physically-based hurricane hazard model.
“Using this method, multiple environmental parameters can be incorporated, as opposed to only a single parameter such as surface sea temperature.”
ARA’s methodology was approved following the final hearing for the model on Friday, June 2.
