- Florida Commission on Hurricane Loss Projection Methodology To Recommend Hurricane Model Evaluation Process for Flood Counterpart
- November 15, 2014
- Law Firm: Colodny Fass P.A. - Fort Lauderdale Office
The Florida Commission on Hurricane Loss Projection Methodology ("Commission") Flood Standards Development Committee ("Committee") met yesterday, October 30, 2014.
Beginning the agenda, Chairman Dr. Jack Nicholson briefed Committee members on the Florida Hurricane Catastrophe Fund's ("FHCF") efforts in developing standards for flood loss modeling. He also discussed the definition of "flood."
FHCF Staff members noted that, once they are available, the draft standards will be posted on the Commission's Flood Standards Development Web page containing hyperlinks to related documents, studies and references. The page also will be a mechanism for interested parties to provide commentary, they explained.
Leonard Schulte, FHCF Director of Legal Analysis and Risk Evaluation, briefly reviewed recent statutory changes relating to the National Flood Insurance Program ("NFIP"). Enacted in 2014, SB 542 provided a private market alternative to the NFIP by allowing admitted insurers to write personal lines flood insurance policies-standard, preferred, customized and supplement coverage.
Rates for flood insurance in Florida are regulated under the general property insurance provisions of s. 627.062, F.S. It was noted that flood rates filed prior to October 1, 2014 will be regulated under the use and file provision of the law, but rates filed after October 1, 2019 will be subject to the regular requirements of other property insurance rates.
Mr. Schulte reminded Committee members that the Commission must adopt actuarial methods, principles, standards, models or output ranges for personal lines residential flood loss coverage prior to July 1, 2017. All materials submitted to the Commission used in designing or constructing a flood model will be exempt from public records laws.
At yesterday's meeting, several modelers provided presentations on flood loss modeling concepts. Among those was Risk Management Solutions ("RMS"), which was represented by Matt Nielsen, who reviewed his company's ongoing work on flood loss modeling.
He explained that, for several years, RMS has provided a storm surge model that is incorporated into its hurricane model. Meanwhile, RMS is in process of developing inland flood loss models, which will include data on both rainfall from tropical storms and non-tropical front systems with heavy rainfall, inasmuch as the storm surge model within the hurricane model does not account for these types of lesser storms. Mr. Nielson noted that RMS uses a variety of methods to verify each component of its model.
The Florida Public Model is currently working to enhance portions of its own storm surge and freshwater flooding aspects, along with hurricane-related rain flood risk data for the purpose of estimating both insured and uninsured losses that may be created. Florida Public Model researchers also have identified issues with Lake Okeechobee as potential concerns. They believe further research must be done on the effect of water being moved by hurricane force winds that results in erosion of Lake Okeechobee's levies. In turn, a breach thereof could result in catastrophic flooding. The Florida Public Model will use storm surge and insurance claims data to validate its results.
Other presentations were made by AIR, which released an inland flood model in October 2014.
EQECAT, now part of CoreLogic, currently has various flood models available. KatRisk has no Florida-approved mode, but is in process of developing one.
Dr. Nicholson briefly discussed the catastrophe modeling review and evaluation process, which he said is based on modeler expertise and credentials, along with peer review. The nature of the event, exposure and insured loss also must be part of individual model evaluation.
The Commission will recommend that the same evaluation process be used for flood models as that used for hurricane models.