NEWARK, Calif. - October 31, 2018 RMS, the leading global risk modeling and analytics firm, announces the release of its US Inland Flood High Definition (HD) model. Flood is the most frequent and widespread peril in the U.S. and has historically been difficult to model and insure due to its relative complexity and the lack of quality data available. RMS has leveraged extensive expertise in flood modeling to bring to market an innovative solution that solves for these existing market challenges. The new RMS US Inland Flood HD Model accounts for all types of inland floods, including those induced by both tropical cyclone and non-tropical cyclone rainfall, and is coupled with the RMS North Atlantic Storm Surge Model to provide a comprehensive view of inland flood risk alongside hurricane-driven coastal flood and wind risk.
Recent events such as Hurricane Harvey and Hurricane Florence have driven increased awareness around the potential flood risk across the US along with the large gaps that currently exist in coverage. There is immense opportunity for the insurance industry to grow the US Flood market, but this requires leveraging the right tools to understand and accurately assess this risk.
Vice President, Dr. Pete Dailey, commented: “The market demand for flood insurance is growing, but to date the industry has lacked a tool to enable a rigorous and comprehensive treatment of all sources of flood risk. We are excited that our investment of over 60 man-years of development effort have culminated in a tool that meets this broad market requirement.” RMS HD Inland Flood Model also takes the challenge of data availability head on, with first-of-its-kind capabilities to account for key drivers of flood risk, including employing intelligent modeling techniques to account for key structural attributes such as first floor height and basement characteristics. The model also includes the first market-wide solution to account for the presence of all defenses that help mitigate flood risk, even in the absence of this information being available in public datasets.RMS Vice President, Arno Hilberts, stated: “This model is based on state-of-the-art hydrodynamical modeling, and is the first of its kind to be explicitly calibrated to a both depth and flow observations, and validated using flood zone and flood depth information from FEMA, as well as detailed claims data. This makes is unique, and enables our clients to use the model all the way from portfolio-management to the point of underwriting.”
The new HD model considers all these key drivers and mitigators of flood and leverages robust vulnerability relationships to precisely translate flood hazard to physical damage and financial costs for a full range of residential, commercial and industrial structures.
The new HD Financial model facilitates understanding of cross-peril correlation with the ability to appropriately capture seasonality impacts, and accurately and flexibly model time-dependent reinsurance policy terms. Such innovations facilitate risk differentiation and competitive underwriting and pricing to quickly optimize risk selection, while managing and ultimately growing a profitable portfolio.
Expectations are that the flood market will continue to present opportunity to (re)insurers equipped with the most versatile modeling solutions. RMS Chief Risk Modeling Officer, Dr. Mohsen Rahnama commented: “With the NFIP’s recent removal of the non-compete clause for Write-Your-Own carriers, and it’s pending reauthorization in November, we are hopeful that private participation in the flood insurance market will only increase. As the market evolves, those writing flood insurance will rely on a model that allows them to accurately capture the full range of potential losses from inland and coastal flooding.”
What is new in Version 18?
Newark, CA – November 16, 2022 - RMS®, a Moody’s Analytics company and a world-leading risk modeling and solutions company, estimates total private market U.S. insured losses from Hurricane Nicole to be less than US$2 billion, with the best estimate of US$1.6 billion. This estimate represents insured losses associated with wind, storm surge, and precipitation-induced flooding. Total insured loss estimates for Hurricane Nicole (US$ billions): Wind (incl. coverage leakage) + Surge Inland Flood excl. NFIP Total excl. NFIP Best Estimate Private Market Insured Loss 1.2 – 1.8 < 0.1 1.3 – 1.9 1.6 RMS estimates privately insured wind and storm surge losses of US$1.2 billion to US$1.8 billion from Hurricane Nicole, based on analysis of ensemble footprints in Version 21 of the RMS North Atlantic Hurricane Models. RMS ensemble footprints are reconstructions of Nicole’s hazard that capture the uncertainties surrounding observed winds and storm surge. RMS modelers developed and validated the wind, storm surge, and inland flood reconstructions and corresponding loss estimates using publicly available observations, including wind stations, river gauge water level data, and web reconnaissance. Jeff Waters, Staff Product Manager, North Atlantic Hurricane Models, RMS, said: “Even though Hurricane Nicole was much less intense than Hurricane Ian a few weeks prior, it exhibited a large wind field that impacted many of the same areas in Florida. RMS Event Response teams estimate that roughly 98 percent of postal codes in Florida impacted by Nicole were previously impacted by Hurricane Ian. Similar to other overlapping events from previous seasons, such as Hurricanes Ida and Nicholas in 2021, and Laura and Delta in 2020, we expect the overlapping nature of Hurricane Ian and Nicole to introduce significant uncertainties in the loss attribution and claims settlement process.” Additionally, RMS estimates losses for the National Flood Insurance Program (NFIP) from Nicole to be less than US$300 million, and primarily in Florida and Georgia. These losses were derived using the RMS view of NFIP exposure based on policy-in-force data published by FEMA, the Version 21 RMS North Atlantic Hurricane Models, and the RMS U.S. Inland Flood HD Model. Losses reflect property damage and business interruption to residential, commercial, industrial, and automobile lines of business, and consider sources of post-event loss amplification (PLA), inflationary trends, and non-modeled sources of loss. RMS expects the majority of wind and storm surge losses to come from Florida, and the majority of the NFIP and insured flood losses to come from both Florida and Georgia. “Historically, an event of Hurricane Nicole’s magnitude would not exhibit notable PLA impacts if it were to occur on its own. However, the fact that it closely follows a major event with Hurricane Ian, means that the same factors influencing PLA from Ian also apply to Nicole, including shortages of labor, materials, and claims adjusters. This is an example of compounding PLA effects,” said Sarah Hartley, Manager, Event Response, RMS. Hurricane Nicole was the fourteenth-named storm of the 2022 North Atlantic hurricane season, the eighth hurricane, and the second hurricane to make U.S. landfall this season. Nicole made landfall on November 10, 2022, near Vero Beach, Florida as a Category 1 hurricane on the Saffir-Simpson Hurricane Wind Scale with maximum sustained winds of 75 miles per hour (120 km/h). The storm brought a combination of strong winds, storm surge, and heavy rainfall to coastal and inland areas of Florida, including many that are still recovering from Hurricane Ian. Hurricane Nicole briefly re-emerged into the Gulf of Mexico as a tropical storm before weakening to a tropical depression and moving back onshore, tracking northward through the southeast U.S., the Carolinas, and mid-Atlantic regions. Prior to impacting the U.S., Hurricane Nicole hit parts of the Bahamas as both a tropical storm and Category 1 hurricane. However, RMS expected insured losses to be minimal in that region. There are two weeks left in the 2022 Atlantic Hurricane season, which officially ends on November 30. RMS industry loss estimates for landfalling hurricanes provide a comprehensive view, reflecting modeled and non-modeled impacts from all major drivers of damage, including wind, storm surge, and inland flooding. END The technology and data used in providing this information is based on the scientific data, mathematical and empirical models, and encoded experience of scientists and specialists. As with any model of physical systems, particularly those with low frequencies of occurrence and potentially high severity outcomes, the actual losses from catastrophic events may differ from the results of simulation analyses. RMS SPECIFICALLY DISCLAIMS ANY AND ALL RESPONSIBILITIES, OBLIGATIONS, AND LIABILITY WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THIS INFORMATION OR USE THEREOF, INCLUDING ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL RMS (OR ITS PARENT, SUBSIDIARY, OR OTHER AFFILIATED COMPANIES) BE LIABLE FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THE CONTENTS OF THIS INFORMATION OR USE THEREOF.
Newark, CA – October 7, 2022 – RMS®, a Moody’s Analytics company and world-leading risk modeling and solutions company, estimates total private market insured losses from Hurricane Ian to be between US$53 billion and US$74 billion, with the best estimate of US$67 billion. RMS also estimates the National Flood Insurance Program (NFIP) could see an additional US$10 billion in losses from storm surge and inland flooding as a result of the event. Wind incl. coverage leakage Storm Surge excl. NFIP Inland Flood excl. NFIP Total* Best Estimate Private Market Insured Loss $46 – $67 bn $6+ bn $1+ bn $53 – $74 bn $67 bn *Losses rounded to nearest billion The overall industry loss estimate for Ian includes wind and storm surge losses in Florida, South Carolina, North Carolina, Georgia, and Virginia, based on an analysis of ensemble footprints in Version 21 of the RMS North Atlantic Hurricane Models. RMS ensemble footprints are reconstructions of Ian’s hazard that capture the uncertainties surrounding observed winds and storm surge. The industry estimate also includes impacts from precipitation-induced inland flooding in the same regions, using footprints in the RMS U.S. Inland Flood HD Model. “Ian was a historic and complex event that will reshape the Florida insurance market for years to come. Given the complexity of the event and the multiple drivers of the loss, our ability to deploy multiple RMS field reconnaissance teams to conduct damage assessments throughout Florida, including the heavily affected areas of Fort Myers and Cape Coral along the southwest coast, has been a critical component of our analysis. Their assessments have proved invaluable in helping our modeling teams to reconstruct and validate the extent and severity of Ian’s wind and water impacts, and our assessment of the magnitude of the various drivers of the total industry loss,” said Mohsen Rahnama, Chief Risk Modeling Officer, RMS. The RMS estimate reflects losses from property damage, contents, and business interruption, across residential, commercial, industrial, automobile, infrastructure, watercraft, and other specialty lines. Given the complexity of this event and the multiple loss drivers, our ability to couple our detailed review of satellite and digital imagery together with the deployment of multiple RMS field reconnaissance teams have proved to be pivotal in establishing losses across the various business lines. The estimate also considers the impacts of post-event loss amplification (PLA), inflation, and non-modeled sources such as the Assignment of Benefits and litigation. Much of the building stock affected by Ian was also impacted to varying degrees by Hurricane Irma in 2017 and Hurricane Charley in 2004. In some cases, roofs or structures were replaced after Irma and performed well in Ian. However, where buildings were not upgraded to recent codes, Ian’s destructive wind and storm surge will cause widespread roof replacements or total losses. In the loss estimation process, we also considered key aspects of the Florida Building Code, including mandatory limit extensions for ordinance and law, and the application of the 25 percent roof replacement rule. Aside from property damage, we expect significant losses to automobile and watercraft lines in this event due to fewer evacuations in the worst-affected region,” said Jeff Waters, Staff Product Manager, Product Management, RMS. “A sizable portion of the losses from Ian will be associated with post-event loss amplification and inflationary trends. A combination of high claims volume, additional living expenses related to the massive evacuation efforts, prolonged reconstruction in the worst-affected areas, and the prevalent higher-than-average construction costs will contribute to a significant economic demand surge. Additionally, we expect the Assignment of Benefits and litigation – despite recent legislative efforts to curb their misuse, to influence the overall loss severity, especially in cases where coverage leakage of water losses onto wind-only policies is likely. All these social inflation factors will lead to complex and lengthy claims settlement processes in this event, amplifying loss adjustment expenses and corresponding claim costs,” said Rajkiran Vojjala, Vice President, Model Development, RMS. Losses to the National Flood Insurance Program of approximately US$10 billion are based on using the RMS view of NFIP policy-in-force data published by FEMA, the Version 21 RMS North Atlantic Hurricane Models, and the RMS U.S. Inland Flood HD Model. While NFIP policy take-up is substantial in many coastal areas affected by Ian (up to 50 percent), areas hard-hit by inland flooding in the event typically have minimal (less than 10 percent) NFIP participation. RMS expects the majority of total insured losses from Ian to be driven by wind. However, a sizable portion (up to 25 percent) of the total insured losses (incl. NFIP) will be driven by surge and flood. While insured wind losses and losses to the NFIP will be driven by residential lines, surge and inland flood losses to the private market will be dominated by commercial, industrial, and automobile lines. In addition to the U.S., Hurricane Ian also impacted parts of the Caribbean, notably Cuba, with strong winds, heavy rain, and flooding. While Cuba saw severe economic and infrastructure damage in the event across many areas, RMS estimates insured losses in Cuba will be minimal due to low insurance penetration in the region. After Ian passed Cuba, it made landfall near Cayo Costa, Florida on Wednesday, September 28, as a strong Category 4 hurricane on the Saffir-Simpson Hurricane Wind Scale. At landfall, Ian produced sustained winds of 150 miles per hour (240 km/h), according to the National Hurricane Center. After traversing slowly over central Florida, it emerged over the Atlantic before making a second landfall near Georgetown, South Carolina on Friday, September 30, as a Category 1 hurricane. Ian brought destructive hurricane-force winds to a broad swath of southwest and central Florida, catastrophic storm surge along the southwest Florida coastline, and widespread inland flooding throughout Florida and the Carolinas. Hurricane Ian was the ninth named storm of the 2022 North Atlantic hurricane season, the fourth hurricane, and the first named storm to make landfall in the U.S. this season. Ian was the first major category hurricane to make landfall in Florida since Hurricane Michael in 2018, and the seventh U.S. major hurricane landfall since 2017 (Harvey, Irma, Michael, Laura, Zeta, Ida). Less than two months remain in the 2022 North Atlantic hurricane season, officially ending on November 30. END The technology and data used in providing this information is based on the scientific data, mathematical and empirical models, and encoded experience of scientists and specialists. As with any model of physical systems, particularly those with low frequencies of occurrence and potentially high severity outcomes, the actual losses from catastrophic events may differ from the results of simulation analyses. RMS SPECIFICALLY DISCLAIMS ANY AND ALL RESPONSIBILITIES, OBLIGATIONS AND LIABILITY WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THIS INFORMATION OR USE THEREOF, INCLUDING ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL RMS (OR ITS PARENT, SUBSIDIARY, OR OTHER AFFILIATED COMPANIES) BE LIABLE FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THE CONTENTS OF THIS INFORMATION OR USE THEREOF.
LONDON – 26 August, 2022 – AXA Climate, an entity of the AXA Group specializing in climate change adaptation, will include HWind analytics from RMS®, a Moody’s Analytics company and world-leading risk modeling and solutions company, as a trigger metric for its relevant parametric insurance policies. HWind produces real-time data sets for tropical cyclone events, allowing quick evaluation of hurricane trigger/payout conditions, which enables parametric policyholders to gain rapid access to capital following impactful events. RMS HWind solutions offer comprehensive coverage over the Western North Atlantic, Eastern Pacific, and Central Pacific basins. Using RMS HWind helps AXA Climate to be fully flexible as to how and where they structure parametric policies, allowing AXA Climate to reassure their clients that they will quickly receive the protection they paid for when damaging winds are present. Amaury Dufetel, Head of Insurance, AXA Climate, said: “As an Engaged Climate Insurer, we believe the preciseness of sophisticated real-time data is essential to improve the use and uptake of parametric insurance solutions. Data coming from independent reputable organizations like RMS HWind solutions, developed over more than 25 years by one of the world’s leading hurricane observation researchers, will allow us to structure innovative parametric covers and bring to our clients the best tailormade Tropical Cyclone coverage both in terms of price and claim settlement.” Charlotte Acton, Senior Director, RMS, added: “By working closely with AXA Climate, we have been able to help an important client develop innovative products that offer a competitive advantage and can help enable growth into new markets. Parametric insurance is another example of how the insurance industry can help build resilience into economies, which in turn helps reduce the protection gap. RMS remains committed to supporting insurance innovation, in our products, for our clients, and for their end users.” About AXA Climate AXA Climate is a Committed Climate Insurer: We integrate best-in-class climate expertise and data in all our products. We believe that from this decade onwards, only private and public actors committed to a sustainable transition will be insurable. Our mission is to reinvent the insurance business to support those engaged in sustainable transitions. We have developed a set of business lines around climate change: parametric insurance against climate risks, climate and nature consulting services, financing and climate training to engage all employees. We are a team of over 150 collaborators spread across the 5 continents, leveraging the entire AXA ecosystem. Visit https://www.climate.axa/ to learn more and follow us on LinkedIn.