Computer Models are used to predict Catastrophes and raise Premiums. There is a dispute over how long a time period is valid for inputting data.
In simple terms, Property Insurance Companies would like to use the last 5 years, for example, which would treat Hurricanes like Charley, Katrina and Wilma as the new reality. They base their Premium Rate Increase Requests accordingly. This is in fact very like what they do at the present time.
Others rely on inputting the Catastrophe and other weather data which has accumulated over the last 100 years or so. This would have the effect of keeping Property Insurance Premiums lower and produce more accurate results, or at least this system has produced more accurate results for years since it is the system that has been and is still in use.
This dispute appears to be at the center of talks in Tallahassee, Florida in the past week, as reported by Julie Patel of the Ft. Lauderdale Sun-Sentinel at "House Keys/Hurricane Insurance is the Talk of Tallahassee Today" (Posted Thursday, July 23, 2009). Florida is the only State with its own Computer Model for predicting the frequency and likelihood of Catastrophes like Hurricanes -- and which Florida uses to check the data relied on by Property Insurance Companies filing Premium Rate Increase Requests.
The results are not in. As soon as they are, they will be posted. Discussions like these are important.
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