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TALLAHASSEE, Fla.The major catastrophe modeling firms last week agreed to hand over data and modeling information to Florida lawmakers, who this week are meeting in special session to deal with insurance issues.
House Speaker Marco Rubio, R-West Miami, last week asked four catastrophe modeling firms and a state insurance regulator to provide copies of their hurricane loss projection models and the factors and assumptions behind them--"including proprietary information"--to his office by noon last Thursday.
The demand came as Florida prepares for this week's special legislative session. A spokesman for Rep. Rubio said last week that the lawmaker was concerned about modelers' use of five-year projections of hurricane activity to project possible losses. "It's a constant concern for him," said the spokesman. "We're hoping that they comply, but the House reserves the right to subpoena them if they don't," the spokesman said.
Speaker Rubio's Jan. 9 letters went to AIR Worldwide in Boston; Applied Research Associates Inc. of Raleigh, N.C.; Oakland, Calif.-based EQECAT Inc.; and Newark, Calif.-based Risk Management Solutions Inc. The speaker requested the same information from Florida Insurance Commissioner Kevin McCarty as well. In his letter, Rep. Rubio said that information that met Florida's definition of a trade secret "will be protected from public records requests."
But no subpoenas proved necessary; all of the recipients of the letter agreed to provide the requested information.
"There is a great deal of uncertainty about these models and whether they are being used to unjustifiably raise insurance rates," Rep. Rubio said in a statement issued after the firms agreed to his request. "I am pleased that all five organizations have agreed to work with us on making sure that Floridians are receiving a fair deal."
Late last Thursday, one of the firms--RMS--released a written response to the request.
In the statement, RMS said that its submission "includes documentation on the assumptions and factors used in developing the RMS hurricane loss projection model. We have provided thorough detail on all of the modules of the RMS model: stochastic storm set generation, hurricane characteristics and the windfield generation process, the derivation and implementation of vulnerability functions, actuarial standards including a full discussion of our financial module, and the systematic process RMS undertakes to develop our software technology to implement the hurricane model. We also welcome the opportunity to meet with representatives from the Florida Legislature for presentations and discussions on all components of our models."
The statement added that RMS believes "working closely with the Florida Legislature will help bring a neutral science-based perspective to the understanding of hurricane catastrophe risk in Florida, which will ultimately inform the process for establishing longer-term solutions to the current insurance crisis in Florida."
During the special session, scheduled for Jan. 16-22, lawmakers will consider legislation to reduce current property insurance premiums, reduce the future growth rate of property insurance premiums, improve the availability and stability of property insurance, and improve building codes.