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Volume 32, Issue 2

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Thursday, 08 July 2010 10:53

Managing Risk with Advanced Modeling Techniques

Written by  GARY KERNEY, BILL CHURNEY & JIM LOVELAND

The term megacatastrophe has continued to gain prominence in the insurance and reinsurance worlds over the last few decades. Typically used to describe the havoc wreaked by major disasters such as Hurricane Andrew in 1992 and Hurricane Katrina in 2005, megacatastrophe has also been used to illustrate the comprehensive and devastating effects of the four hurricanes to strike Florida in 2004 that caused billions of dollars in damage.Another such event was Hurricane Ike. A strong Category 2 storm when it struck the Gulf Coast in September 2008, the storm surge created by Ike was similar to that generated by a Category 4 hurricane. The storm’s remnants traveled north, carving a path of destruction from the Gulf Coast through the Midwest and up to the Great Lakes region. Property owners were then left to clean up damages totaling billions of dollars from a storm many never expected to reach them.The consequences