RMS Announces New Presentation of Hurricane Risk for Insurance-linked Securities
Newark, Calif. -
July 26, 2012 -
As part of its Resilient Risk Management initiative, RMS is helping catastrophe risk managers understand the uncertainties inherent in catastrophe modeling, understand the impact of different parameter assumptions on the results, and tailor model parameters based on how the results are being used.
Over the past year, RMS has received clear signals from the insurance-linked securities market that RMS' long-term rate model of hurricane activity is more useful in facilitating market transactions than its medium-term rate model. RMS will now use the long-term rate model to produce its Reference View of risk and the medium-term rate model as a sensitivity test for insurance-linked securities offering circulars.
In addition, RMS will add a scenario to offering circulars that assumes only 10 percent of modelled storm surge losses 'leak' into residential and commercial low-rise wind-only policies. This scenario will help investors understand storm surge sensitivity and will enable comparison to other available catastrophe models.
RMS models and software help financial institutions and public agencies evaluate and manage catastrophe risks throughout the world, promoting resilient societies and a sustainable global economy.