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EQECAT Releases the First High Resolution Tornado/Hail
Catastrophe Model
New Model Reveals Potential for $11 Billion Industry
Loss
June 9, 2004
(Oakland, CA)
EQECAT, Inc. has announced the release of its U.S. Tornado/Hail/Straight Wind
model for assessing and managing insurance risk associated with these key natural
hazard perils. The model is the latest addition to EQECAT's comprehensive WORLDCATenterprise™ catastrophe management software suite, which includes natural
hazard and man-made perils in 88 countries, including U.S.
models for earthquake, hurricane, windstorm, wildfire, flood
and terrorism risk.
Tornado and hail are among the most devastating natural
hazards, accounting for 46 percent of all U.S catastrophe
losses since 1949. As recorded by Property Claims Service,
the industry losses from the May 3-4, 1999 events in Oklahoma
were estimated to be $1.6 billion. The EQECAT model reveals
that if a similar storm system were to occur in a populated
area such as Dallas, Texas, the losses to insurers could
exceed $11 billion.
"With
the potential for multi-billion dollar insurance industry
losses, EQECAT recognized the need to provide the insurance
industry with a better catastrophe-modeling tool to manage
this exposure," said Richard Clinton, president of EQECAT.
"We believe that our new model is another example of
EQECAT's technology leadership and ability to provide solutions
through innovation."
Tornado/Hail Model Simulates More Events Than Legacy Models
Recent advances in weather data collection have made it
possible for EQECAT to develop the first high resolution
tornado/hail insurance model. Due to the extremely concentrated
footprint associated with tornado touchdowns, a high resolution
model is the only way to reliably quantify and manage tornado
and hail risk. EQECAT's goal was to create an innovative
model that would properly estimate loss potential from these
severe weather systems, some of which can produce dozens
and even hundreds of tornado touchdowns and hail streaks
over several days. The net result is a tornado/hail model
that employs 800,000 stochastic events that simulate over
20 million tornadoes and 60 million hail streaks to enable
the most refined analysis of risk available.
Tornado/Hail Modeling Presents Special Challenges
"Modeling tornado and hail loss presents special challenges
in the development of a refined and accurate model,"
said Dr. Mahmoud Khater, EQECAT's chief technology officer.
"Tornado touchdowns are geographically very small and
are infrequent in any one area. In addition, the overall
geographic area exposed to tornado-hail risk is very large.
As a result, the model must include a large number of stochastic
events to accurately represent the risk to individual locations,
or to highly concentrated books of business," said Dr.
Khater.
"Older models simply do not simulate enough events to
model the risk at a refined level of detail. This causes
model bias that often results in a significant underestimation
of the real exposure," said Dr. Khater.
"Another challenge was to provide heightened analysis
speed, despite an increase in the number of events being
modeled as compared to older models," said Dr. Khater. "Fortunately,
EQECAT's innovative modeling technology makes this possible.
EQECAT's model can complete a detailed tornado and hail analysis
for a large portfolio in less than one day, which we believe
is considerably faster than legacy models," said Dr.
Khater.
The EQECAT Tornado/Hail model is available for immediate
delivery. If you would like more information, please call
+1 510 817 3101 or e-mail inquiries to info@absconsulting.com or
refer to www.absconsulting.com
or www.eqecat.com websites.
EQECAT Serves the Global Insurance, Business, Financial
Services
EQECAT, Inc. an affiliate of ABSG Consulting Inc., serves
the global property and casualty insurance industry, major
multinational corporations and financial institutions. EQECAT
is known as the technical leader and innovator in the development
of analysis tools and methodologies to quantify insurers'
and major corporations' exposure to natural and manmade catastrophic
risk.
It is a recognized industry thought-leader providing the
expertise and real-world tested tools to turn risk-theory
into innovative actions and solutions to effectively manage
extreme-risk worldwide. EQECAT's flagship product, WORLDCATenterprise
is a multi-user platform to evaluating insured risks for
multiple natural catastrophe perils in 88 countries.
EQECAT was founded in 1994 and is headquartered in Oakland,
California. ABSG Consulting Inc., headquartered in Houston,
Texas, has risk-management revenues of more than $140 million,
and more than 1,000 employees worldwide. For additional information,
please log on to www.absconsulting.com,
or www.EQECAT.com.
For more information,
contact:
Tom Larsen
EQECAT, Inc.
1-510-817-3100 | tlarsen@absconsulting.com
Eric R. Samansky
The Samansky Group
1-516-319-0858 | eric@samanskygroup.com |
