Tuesday, December 30, 2008

Missed by thisssss much...

Karen Clark & Company, a catastrophe risk management firm , analyzed near term models that were introduced in 2006 by the three major catastrophe modelers − AIR Worldwide (AIR), EQECAT and Risk Management Solutions (RMS). AIR initially predicted an overall annualized increase in hurricane losses of 40 percent above the long term average, but later lowered that figure to 16 percent in 2007. EQECAT predicted increases of between 35 and 37 percent, and RMS consistently predicted an overall increase of 40 percent above the long term average.

Assuming long term average annual hurricane losses of $10 billion for each year, these figures translate into cumulative insured losses for 2006 through 2008 of $37.2 billion, $40.8 billion, and $42 billion respectively, for the AIR, EQECAT and RMS models. The actual cumulative losses were $13.3 billion, far lower than the model predictions, and more than 50% below the long term cumulative average of $30 billion.
We've seen the Global Warmenists backtrack on their predictions of ever strengthening and frequent hurricanes due to man's carbon output (unless, of course, a hurricane struck and they could whore it out for publicity to their religion in the short term without ramifications).

However, this report was created for the bean counters of insurance and reinsurance carriers. The models were used, likely, to set premiums and set aside reserves unassociated with actual losses. Just like the Global Warmenists...they were WAY off. They were more than 50% off. If you have homeowners coverage in the southeast US...you probably paid a bit extra in your premium to accommodate this if your carrier used the data to set rates.