EQECAT released its initial US Severe Convective Storm Model in 2004, and since then the model has been enhanced to incorporate the latest science. The US tornado risk analysis model addresses the loss potential associated with weather systems with thunderstorms that produce damaging tornado outbreaks, hail storms, and straight-line winds and is part of the RQE™ (Risk Quantification & Engineering) cat modeling platform.
All regions of the continental United States have varying degrees of thunderstorm risk. Areas of high risk include Tornado Alley, a high-frequency tornado risk zone that spans much of Texas, Oklahoma, Colorado, Kansas, Nebraska, and South Dakota. However, deadly and costly tornadoes have occurred in a much broader swath of the central US.
Tornado Formation Conditions
Source: National Weather Service
EQECAT integrates updated building codes and construction practices with the latest science and engineering to produce this state-of-the-art tornado risk analysis model for the United States. Both the hazard and vulnerability components of the US Severe Convective Storm Model offer unique modeling innovations, including:
The RQE™ platform enables robust risk measurement and differentiation calculations. EQECAT’s unique approach to uncertainty is especially relevant to regions experiencing infrequent tornado touchdowns. Our robust methodology, which retains the full breadth of uncertainty through each step of the model calculation and reports multiple loss outcomes for any one event, allows re/insurers to:
The US Severe Convective Storm Model features include:
The frequency of severe convective storm events is based upon NOAA's Storm Prediction Center (SPC) public record of tornadoes and hail reports from 1950 onwards. The records contain details about each tornado event, including the tornado identifier, the tornado's Fujita classification, date, time of occurrence, maximal width, the tornado's length, number of injuries and fatalities, and geographic starting and ending position (latitude and longitude). In addition, the hail records provide date, time of occurrence, geographic position, and hail size, from a minimum of 0.75 inches up to 5 inches and above.
Improvements in tornado and hail tracking technology and reporting have led to an apparent increased frequency in tornado activity. The use of Doppler radar beginning in the mid-1980's and an improved understanding of tornado and hail formation processes enabled improvements to the reporting process especially with low F-Scale tornadoes. Therefore, historical data must be adjusted before a valid model may be developed. EQECAT's solution to the problem of reporting bias is to focus on data reported since the early 1990s, an approach that EQECAT validated using NOAA research. The resulting de-trended historical data set is used to model EQECAT's probabilistic stochastic event set for tornadoes, hail storms, and straight-line winds. Its robust probabilistic set includes approximately 840,000 events. The model also accounts for temporal and spatial clustering of events. The probabilistic set is evaluated against the historical data set for completeness and validation.
Tornado Damage in Joplin, Missouri - 2011
Source: Columbia Daily Tribune
The nature of severe convective storm events includes events that can:
Convergence testing was done individually for separate components of severe convective storms (tornadoes, hail storms, and straight-line winds) and upon the combined model to demonstrate a consistent measure of risk.
The annual probability of a tornado touchdown upon a specific parcel of land is very small, and the effectiveness of a loss model for severe convective storms requires identifying all potential sources of validation.
EQECAT uses stringent acceptance criteria in the development of the stochastic event set. The resolution grid of tornadoes, hail storms, and straight-line wind events is constant across the landscape, which provides consistent results. Since all geographies are modeled with equal confidence, even the most specialized portfolio will be modeled to the same high standards as a market portfolio. The model includes spatial and temporal clustering, which is an essential aspect of severe convective storm risk.
The tornado risk analysis model incorporates vulnerability curves that are developed from reviews of historical loss data and wind risk studies conducted by EQECAT and ABS Consulting over the last 20 years.
The tornado/hail model specifically models wind (tornado and straight-line winds) and hail (damage due to the kinetic energy associated with impact).
The model calculates damage to structures (building damage), contents, and damage related to time (loss of operations or loss of use). Separate, independent vulnerability functions are used for calculating losses related to each coverage type. Time-element vulnerability functions are a function of structural and contents damage.
The US Severe Convective Storm Model helps reinsurance and insurance clients perform a variety of crucial analyses and provide risk perspectives, including:
The US Severe Convective Storm Model specifications include:
Import and risk evaluation is geocoded at latitude and longitude coordinates, ZIP Codes, and county levels. When exposure data is provided at aggregate levels (ZIP Code and county), the model adds refinement to loss results by disaggregating data to finer resolution points based on weighted distribution of values for the purpose of analysis and risk estimation.
The hazard is gridded into cells of approximately 10 km2, smaller than the typical ZIP Code. The tornado touchdown grids are elongated rectangles aligned in a north-easterly direction approximating the most likely tornado path. Hail storm grids are square.
The model's geographic coverage includes the 48 contiguous United States (including the District of Columbia).
Lines of business modeled in the US Severe Convective Storm Model include:
With many different structure types and dozens of occupancy categories for each line of business, the US tornado/hail model differentiates risk across hundreds of combinations.
Risk metrics include loss exceedance curves, including OEP/AEP, AAL, TVAR, event-by-event losses with associated uncertainty, as well as simulations of historical events. Reporting of results supports multiple levels of refinement:
In addition, RQE’s Year Loss Table (YLT) uniquely features three dimensional output:
Instead of reporting mean losses with standard deviations, each loss in the YLT represents one possible outcome for the associated event. This allows users to retain the full distribution of uncertainty when using model output in dynamic financial analysis and capital modeling. Conventional event loss results and other risk metrics can be derived from the YLT with arithmetic or simple database queries. YLT and event loss results are supported at the portfolio level.
Other risk metrics are supported at multiple levels of refinement, from total aggregate portfolio results to detailed output by policy and site.
All major insurance policy structures and reinsurance treaty types are modeled.
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US Severe Convective Model Fact Sheet
(PDF 420 KB)