Since its inception, hurricane catastrophe modeling has evolved, responding to climate events and the needs of the insurance industry. Initially, hurricane cat modeling was predicated on the long-term view of risk, based on the historical record stretching back to the 1800s in the U.S. The “near term” view of risk was introduced following a series of damaging storms in Florida during the 2004 and 2005 seasons.
Now, with the effects of the changing climate becoming ever more apparent, current and future climate views are being introduced, using current and future environmental data representative of a given climatology. Incorporated alongside the more traditional views of hurricane catastrophe modeling, a future-based view of climate can provide an underwriting organization and its stakeholders an additional, more dynamic view of hurricane risk.
Applied Research Associates, Inc. (ARA) has pioneered the incorporation of climate change into cat modeling. Read more in an article from The Demotech Difference by ARA’s George Freimarck, senior business development manager for catastrophe risk modeling, here.
