Predicting losses of residential structures in the state of Florida by the public hurricane loss evaluation model

Shahid Hamid, B. M. Golam Kibria, Sneh Gulati, Mark Powell, Bachir Annane, Steve Cocke, Jean Paul Pinelli, Kurt Gurley, Shu Ching Chen

Research output: Contribution to journalArticlepeer-review

56 Scopus citations

Abstract

As an environmental phenomenon, hurricanes cause significant property damage and loss of life in coastal areas almost every year. Although a number of commercial loss projection models have been developed to predict the property losses, only a handful of studies are available in the public domain to predict damage for hurricane prone areas. The state of Florida has developed an open, public model for the purpose of probabilistic assessment of risk to insured residential property associated with wind damage from hurricanes. The model comprises three components; viz. the atmospheric science component, the engineering component and the actuarial science component. The atmospheric component includes modeling the track and intensity life cycle of each simulated hurricane within the Florida threat area. Based on historical hurricane statistics, thousands of storms are simulated allowing determination of the wind risk for all residential Zip Code locations in Florida. The wind risk information is then provided to the engineering and actuarial components to model damage and average annual loss, respectively. The actuarial team finds the county-wise loss and the total loss for the entire state of Florida. The computer team then compiles all information from atmospheric science, engineering and actuarial components, processes all hurricane related data and completes the project. The model was submitted to the Florida Commission on Hurricane Loss Projection Methodology for approval and went through a rigorous review and was revised as per the suggestions of the commission. The final model was approved for use by the insurance companies in Florida by the commission. At every stage of the process, statistical procedures were used to model various parameters and validate the model. This paper presents a brief summary of the main components of the model (meteorology, vulnerability and actuarial) and then focuses on the statistical validation of the same.

Original languageEnglish (US)
Pages (from-to)552-573
Number of pages22
JournalStatistical Methodology
Volume7
Issue number5
DOIs
StatePublished - Sep 2010

Keywords

  • Damage
  • Goodness of fit
  • Hurricane
  • Insurance loss
  • Poisson
  • Regression
  • Sensitivity
  • Uncertainty
  • Validation
  • Wind model

ASJC Scopus subject areas

  • Statistics and Probability

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