Incorporating a Hurricane Model into Property Ratemaking

This paper explains the procedures used to incorporate a hurricane model into the development of state loss costs by territory for personal property and state loss costs by territory and construction class for commercial property. It explains why a modeling approach was used to estimate losses for hurricane perils. Issues discussed in the procedures include the combination of modeled loss estimates with insurance data, the adjustments for deductibles/coinsurance clauses and the application of trend and credibility. The paper also discusses the continuing activities of model use and comments on other applications for hurricane models, such as its use in the redefinition of territories.