EQECAT Model Submission - Florida State Board of Administration

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The Florida Commission on Hurricane Loss Projection MethodologyGeneral StandardsProbabilistic Annual Damage & Loss is computed using the results of 32,032stochastic storm simulation results. Annual damage and loss estimates aredeveloped for each individual site and aggregated, if desired, to overallportfolio damage and loss amounts. USWIND’s climatological models arebased on NOAA (National Oceanic & Atmospheric Administration)/NWS(National Weather Service) Technical Reports. Climatological probabilitydistributions (i.e., for storm parameters) were developed using an AdaptiveKernel Smoothing technique applied to the historical hurricane recordpublished by NOAA.Overall Model MethodologyUSWIND modeling methodology can be segmented into four components: 1)the Hazard definition, 2) Geocoding of Risk Location, 3) Damage estimate,and 4) Loss estimation.1. Hazard DefinitionThe storm database used by USWIND is a combination of historical andstochastic storms. Wind speed probabilistic distributions are calculated usingthe probabilistic distributions of all important storm parameters. The stormintensity is driven directly from the coastline-dependent smoothed wind speeddistributions generated from the information in the National Hurricane CenterHURDAT. The distributions for radius of maximum winds and translationalspeed are derived from NOAA Technical Report NWS 38 [Ho et al. 1987],and the National Hurricane Center’s Tropical Cyclone Reports andAdvisories. A proprietary wind speed equation based upon the NOAA modelas published in NWS 23 [Schwerdt, Ho, and Watkins 1979] and NWS 38 [Hoet al. 1987], modified and generalized to properly simulate wind speeds for allSSI categories of storms, computes a central pressure, which is used to applyinland decay [Vickery and Twisdale 1995] and as an input to thedetermination of the radius of maximum winds for severe storms. Theequation then computes wind speeds using the storm’s maximum sustainedwindspeed, the filling rate, radius to maximum winds, the storm track,translation speed, the gust factor [Krayer and Marshall 1992], the stormprofile (attenuation of wind speed outward from the center), and the frictioncaused by local terrain and man-made structures.2. Geocoding of Risk LocationUSWIND utilizes an embedded commercial GIS (Geographic InformationSystem), MapInfo, to compute the latitude and longitude of each siteanalyzed. The street address level, where such data is available, is used togeocode to the lat./long. coordinates. Failing the presence of a streetaddress, the geocoding can be done at a ZIP Code, City, or County centroidbasis. Wind speed distributions at the site locations are computed taking localfriction into account.14
The Florida Commission on Hurricane Loss Projection MethodologyGeneral Standards3. Estimation of DamageUSWIND provides the facility to define each of the property assets beinganalyzed in order to compute resulting damage. Damage can be calculatedfor Structure, Contents, Time Element (such as Additional Living Expense(ALE) or Business Interruption (BI)), and up to three additional user definedcoverage types. Site information includes the latitude and longitude of thelocations, the structure types (96 types), structure details such as number ofstories, insured value, cladding type and a class of occupancy type (12types). Vulnerability functions may be modified by the incorporation ofsecondary structural components such as roof type, roof strength, roof-wallstrength, wall-floor strength, wall-foundation strength, opening protection, andwind-door-skylight strength. Damage is estimated using vulnerabilityfunctions associated with the structure definition and occupancy type and thedistribution of peak gust wind speeds at each site. The vulnerability functionsused by USWIND have been derived through three methods: empirical data,expert opinion, and engineering analysis [Fujita 1992, McDonald-MehtaEngineers 1993, Simiu and Scanlan 1996].The probabilistic distribution of damage (for each coverage and site) isderived through the discrete calculations of the probabilistic distribution ofwind speeds for the site with the probabilistic distributions of damage forgiven wind speeds. Damage distributions for each of the sites are aggregatedinto an overall portfolio distribution of damage.Since there can be a high degree of damage correlation for similar structuretypes within a geographic area, USWIND properly takes into account site andcoverage level correlations when aggregating individual site damage into anoverall portfolio damage amount.4. Estimation of LossInsurance information in the form of insured values, limits, deductibles andfacultative and/or treaty reinsurance are then aggregated, using discretecalculations, with the probabilistic distribution of computed damage for eachsite to determine the probabilistic distribution of “insured loss” amount.Correlation is properly taken into account when aggregating individual siteloss into an overall portfolio loss amount.ReportsUSWIND produces a vast array of management information, more than 200reports in all. Report categories include:Underwriting. TIV and premium can be mapped by geographicalsegmentation (state, county or ZIP Code) or reported by corporatesegmentation (company, division, branch, line of business, policy type,15
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Modeling Organization: EQECAT, incM
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Form A-4 Output RangesLOSS COSTS PE
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