{"id":5030,"date":"2006-06-01T15:30:16","date_gmt":"2006-06-01T19:30:16","guid":{"rendered":"https:\/\/biznews.fiu.edu\/?p=5030"},"modified":"2021-11-08T12:48:03","modified_gmt":"2021-11-08T17:48:03","slug":"sophisticated-computer-model-adds-to-knowledge-about-the-impacts-of-hurricanes-on-insurance-costs","status":"publish","type":"post","link":"https:\/\/biznews.fiu.edu\/2006\/06\/sophisticated-computer-model-adds-to-knowledge-about-the-impacts-of-hurricanes-on-insurance-costs\/","title":{"rendered":"Sophisticated computer model adds to knowledge about the impacts of hurricanes on insurance costs."},"content":{"rendered":"

\u00a0<\/strong><\/span><\/p>\n

\"\"
\nShahid Hamid<\/strong>, professor in the Department of Finance in the College of Business Administration, director of Florida International University\u2019s International Hurricane Research Center (IHRC)\u2019s Laboratory for Financial, Insurance, and Economic Research, and lead investigator on the project<\/em>.<\/p>\n

\"\"
\nResearchers who worked on the model, International Hurricane Research Center (IHRC) affiliates and board members, and other interested parties attended an unveiling of the model at Modesto A. Maidique Campus on May 9, 2006.<\/em><\/p>\n

Hurricane season has arrived again, and South Floridians, among others, are understandably jittery\u2014not only about the possibility of a strike but also about the reality of insurance rate increases. Since insurance companies use proprietary models to determine hurricane losses\u2014and from that, insurance rates\u2014how can regulators determine the appropriateness of requested hikes?<\/p>\n

A computer model, developed over hundreds of thousands of person-hours and drawing upon the expertise of fifteen meteorologists, wind engineers, computer scientists, statisticians, financial analysts, and actuary scientists plus more than a dozen graduate students scattered throughout Florida, will help the insurance regulators do just that. Shahid Hamid,<\/strong> professor in the Department of Finance in the College of Business Administration and director of Florida International University\u2019s International Hurricane Research Center (IHRC)\u2019s Laboratory for Financial, Insurance, and Economic Research, was the lead investigator on the project. He was on hand when the \u201cHurricane Insured Loss Projection Model\u201d was unveiled in the MARC Pavilion at Modesto A. Maidique Campus on May 9, 2006.<\/p>\n

\u201cInsurance companies use commercial models but keep the process secret,\u201d he said. \u201cThe State commissioned a public model so regulators would not have to take the information on faith. Our model, which is independent of both the insurance industry and the State regulatory agencies, makes the information\u2014including the underlying assumptions on which it is based\u2014clear to the person reading the reports we produce.\u201d<\/p>\n

The principal objective of the computer model\u2014which had to meet two hundred standards in computer science, actuarial science, meteorology, engineering, and statistics\u2014is to estimate annual expected insured losses and probable maximum loss as a result of hurricanes, which companies use to determine their windstorm rates. It also can provide immediate estimates of losses from specific hurricane events like Charley, Katrina, and Wilma.<\/p>\n

Future funding will expand applications.<\/em><\/p>\n

Additional funding will make it possible to gather information on the impact of mitigation efforts: for example, the degree to which hurricane shutters mitigate losses. The information is important because hurricane damage must be lowered to sustain Florida\u2019s economy. Increased funding also will enable researchers to expand the model to include commercial structures such as condominiums and apartment buildings, which constitute a large portion of Florida\u2019s structures; currently, only residential structures are included.<\/p>\n

The State began using the model in December, 2005. The model was calibrated mostly to pre-2004 storms and, in particular, to Hurricane Andrew. The project team currently is updating the model with data from more recent storms.<\/p>\n

\u201cTen percent of the storms in the last 100 years have occurred in the last two years,\u201d Hamid said. \u201cWe now are recalibrating the model with new data.\u201d<\/p>\n

Information sharing is underway.<\/em><\/p>\n

Team members\u2014about 40 percent of them from the university\u2014already have published a number of papers based on their findings and many more reports are expected. Though much of the information amassed by the researchers\u2014such as reports and flowcharts\u2014will be shared, the source code will remain proprietary.<\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a0 Shahid Hamid, professor in the Department of Finance in the College of Business Administration, director of Florida International University\u2019s International Hurricane Research Center (IHRC)\u2019s Laboratory for Financial, Insurance, and Economic Research, and lead investigator on the project. Researchers who worked on the model, International Hurricane Research Center (IHRC) affiliates and board members, and other […]<\/p>\n","protected":false},"author":71,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[4],"tags":[619,2412],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/posts\/5030"}],"collection":[{"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/users\/71"}],"replies":[{"embeddable":true,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/comments?post=5030"}],"version-history":[{"count":3,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/posts\/5030\/revisions"}],"predecessor-version":[{"id":36245,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/posts\/5030\/revisions\/36245"}],"wp:attachment":[{"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/media?parent=5030"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/categories?post=5030"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/biznews.fiu.edu\/wp-json\/wp\/v2\/tags?post=5030"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}