How to Best Use Engineering Risk Analysis Models and Geographic Information Systems to Assess Financial Risk from Hurricanes

In the past thirty years six hurricanes have caused over $1 billion of insured losses in the United States. The impact of these events on the insurance industry has been staggering. These major events along with those of a more moderate nature have been particularly devastating to insurers with concentrations of exposure in coastal areas. Due to the unpredictable nature of hurricanes, the insufficient amount of reliable data, actuarial methods of analyzing risk are inappropriate for accurately assessing a company’s potential hurricane exposure. The purpose of this paper is to present the benefits of utilizing both engineering and financial risk models with the latest developments of geographic information systems to better assess the financial risk from hurricanes.