New Model Could Lead To Price Changes

The new hurricane model being introduced by California-based Risk Management Solutions could lead to changes in Bermuda re/insurers’ price structure, a ratings agency specialist has said (Dec. 29).

Taoufik Gharib, director and reinsurance specialist for S&P’s Rating Services in New York, told a recent industry conference the new RMS hurricane model  being released in the spring of 2011 might result in higher property insurance prices for  inland US areas – as well as lower prices along the Atlantic coast.

“Mr. Gharib, who detailed S&P’s stable outlooks for the Bermuda and global reinsurance sectors during a session on key issues impacting the property and casualty insurance industry, was responding to a question from panel moderator, Damien Magarelli, director and analytical manager for S&P, about the impact of the model change on S&P’s ratings,” reports  industry journal ”National Underwriter”.

The current RMS hurricane model remains the industry standard for Bermuda re/insurers although its developers have been criticised for both its lack of accuracy and their alleged failure adhere to rigorous scientific method.

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