RMS Hawaii Hurricane Model Certified for Rate Filings by Hawaii’s Dept. of Commerce & Consumer Affairs

Risk Management Solutions (RMS), a provider of products and services for catastrophe risk management, announced that the Insurance Division of the Department of Commerce & Consumer Affairs in Hawaii has approved the RMS(TM) Hawaii Hurricane model for filing homeowners’ hurricane insurance rates in the state.

“This was the first time that the Insurance Division undertook the validation of hurricane rate filing models,” Brian Owens, director of technical marketing at RMS, remarked. “An objective examination of models by third parties is good for the catastrophe modeling industry and, as always, we welcome it.”

“Hawaii is one of a number of states now engaging companies such as RMS in an acceptability process,” Owens said. “The process was rigorous and thorough, and we worked closely with the Insurance Division’s staff and experts to ensure that all aspects of the model were understood and that the loss costs were acceptable. We are very pleased that our clients may now use the model for filing hurricane insurance rates in Hawaii.”

The RMS (www.rms.com) model incorporates all of the latest technological and scientific advances that RMS uses to construct its tropical cyclone peril models. For Hawaii, the model uses a basin-wide event set that includes realistic hurricane track and pressure histories for almost 2,500 stochastic events in the Central Pacific. Hurricane activity rates are based on the National Hurricane Center (NHC) historical catalog covering over 50 years of hurricane data, with refinements made by RMS and independent experts.

To assess site-specific windspeeds, the model features a time-stepping, directional windfield. The windfield considers the impact of wind direction, topography, and upwind surface roughness on localized winds. Damage for a given windspeed is then estimated using vulnerability functions that are specific to Hawaii’s building practices and codes. The model contains a number of vulnerability classes that are unique to Hawaii.

Insurers can also use the model to simulate key historical storms that have impacted the Hawaiian Islands, such as Hurricane Iniki in 1992 that caused $1.6 billion in insured loss, and Hurricane Iwa in 1982 that caused $137 million in insured loss.