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The AIR Hurricane Model AIR Atlantic Tropical Cyclone Model V7.0 The AIR Hurricane Model AIR Atlantic Tropical Cyclone Model V7.0 Presentation to the Florida Commission on Hurricane Loss Projection Methodology June 2, 2005 www.air-worldwide.com Model Identification Name of model and version: Atlantic Tropical Cyclone Model V7.0 Program: CLASIC/2 V6.6.1 © 2005 AIR Worldwide Corporation AIR Tropical Cyclone Model Components Event Intensity Generation Calculation Damage Calculation Exposure Information Insured Loss Validation, Calculation Reporting Policy Conditions © 2005 AIR Worldwide Corporation Simulated Variables in Hurricane Event Generation Annual Frequency Storm Track Location Frequency Catalog Landfall Min Central Angle Pressure Forward Max Wind Speed Speeds Radius of Max winds © 2005 AIR Worldwide Corporation Probability Distributions for Key Model Variables Annual landfall frequency ¾ Negative Binomial distribution Landfall location ¾ CDF estimated using historical landfall frequencies Minimum central pressure ¾ Combination of Weibull distributions Radius of maximum winds ¾ Function of central pressure and latitude Forward speed ¾ Lognormal distribution Landfall angle ¾ Mixture of Normal distributions © 2005 AIR Worldwide Corporation Windfield Cross Section Eye Right Side Stronger Winds Weaker Winds Rmax © 2005 AIR Worldwide Corporation Typical Vulnerability Function Building Envelope and Structural Damage Roof Covering and Wall Siding Damage Major Structural Damage Damage Ratio Damage Regime II Regime I Regime III v1 V2 Wind Speed © 2005 AIR Worldwide Corporation Probability Distribution around the Mean Damage Ratio f D ( x) 1 Expected Insured Loss = f (x)max{}0, Coins%∗ min(x ∗R ,P ) − DED dx ∫ D []V L x=0 © 2005 AIR Worldwide Corporation 2005 Model Refinements ZIP Code database update Update historical catalog through 2004 based on the events provided in the Official Storm Set supplemented with hurricanes from the 2004 season Update stochastic catalog to reflect the annual frequency of landfalling and bypassing events through 2004, the locations of the landfalls and bypassers, and the refitting of the intensity distributions © 2005 AIR Worldwide Corporation Impact of Model Refinements on Loss Costs Update Statewide Impact Zip Code database -0.1% Catalog update + 3.9% Overall Change +3.8% © 2005 AIR Worldwide Corporation Update ZIP Code Database ZIP Code centroids are population-weighted centroids For each new ZIP Code centroid, distance to coast and average physical properties are re-estimated ZIP Code database is derived from information issued by the USPS as of November 2003 © 2005 AIR Worldwide Corporation Update Historical Catalog through 2004 The historical catalog was updated based on the Commission’s official storm set, with the addition of storms from the the 2004 hurricane season. © 2005 AIR Worldwide Corporation The 2003-2004 U.S. Hurricanes © 2005 AIR Worldwide Corporation Update Stochastic Catalog The stochastic catalog reflects the annual frequency of landfalling and bypassing events through 2004 Probability distribution for landfall location was updated Intensity distributions were updated © 2005 AIR Worldwide Corporation Change in Weighted Average Loss Costs by County (Owners-Frame) © 2005 AIR Worldwide Corporation Stochastic Catalog Changes Drive Changes in Output Ranges Depending on geographic location, the counties could experience an increase or decrease in storm frequency, and an increase or decrease in storm intensity. The following counties experienced a decrease of greater than ten percent for at least one policy type. Change in Zero Deductible Weighted Average Loss Cost County HOF HOM RNF RNM CNF CNM MH Franklin -9.41% -8.68% -6.58% -17.44% -18.41% -13.26% -15.43% Wakulla -6.17% -6.22% -4.66% -13.42% -14.81% -13.09% -14.76% © 2005 AIR Worldwide Corporation Stochastic Catalog Changes Drive Changes in Output Ranges The following counties experienced an increase of greater than ten percent for at least one policy type. Change in Zero Deductible Weighted Average Loss Cost County HOF HOM MH RNF RNM CNF CNM Duval 4.03% 3.21% 2.69% 11.34% 12.58% 9.36% 13.51% Escambia 23.66% 23.65% 23.44% 23.95% 23.97% 20.06% 19.52% Gulf 10.08% 10.14% 6.53% 17.35% 20.24% 17.56% 16.00% Monroe 12.08% 10.83% 9.22% 14.44% 14.41% 13.72% 13.13% Okaloosa 9.34% 9.62% 13.18% 7.68% 11.88% 6.53% 6.62% Pinellas 7.75% 8.34% 6.60% 13.02% 16.62% 14.00% 15.40% St. Johns 5.94% 6.14% 4.39% 12.64% 13.23% 11.48% 11.41% Santa Rosa 11.30% 10.48% 14.16% 0.04% -0.85% 2.38% 0.52% Sarasota 8.69% 7.80% 5.04% 10.76% 10.75% 8.13% 8.79% Volusia 3.41% 3.26% 3.03% 11.06% 10.87% 9.10% 10.54% Walton 8.01% 8.73% 11.83% 11.26% 9.43% 9.09% 8.29% © 2005 AIR Worldwide Corporation Explanation of Resubmitted Pages Deficiencies noted by the Commission were corrected. The Professional Team verified that the corrections were made. AIR resubmitted pages in response to the draft Professional Team Report ¾ Editorial changes Various dates for references provided References for climatological studies and smoothed frequency of hurricane occurrence provided Dates of HURDAT database references revised for consistency Dates of National Hurricane Center reports for Charley, Ivan, and Jeanne updated ¾ Clarified / expanded explanations Clarified descriptions of reinforced concrete and steel construction types Expanded explanation of change in reported probability of hurricanes per year Expanded description of stochastic catalog changes Modified flow chart documenting the derivation and implementation of vulnerability functions ¾ Correction of printing error Revised Form A-7 to correct location of Miami-Dade county in file © 2005 AIR Worldwide Corporation 2004 General Standards © 2005 AIR Worldwide Corporation G-1 Scope of the Computer Model and Its Implementation The AIR hurricane model projects loss costs for personal lines residential property from hurricane events. There has been no change to the scope of the computer model or its implementation. © 2005 AIR Worldwide Corporation G-2 Qualifications of Modeler Personnel and Independent Experts AIR employs a large, full-time professional staff in actuarial science, computer science, insurance and reinsurance, mathematics, meteorology, and other physical sciences, software engineering, statistics and structural engineering. Resumes of new employees were provided to the professional team. © 2005 AIR Worldwide Corporation G-3 Risk Location ZIP Codes used in the model are updated annually with information provided by the United States Postal Service (USPS). The AIR model uses population-weighted ZIP Code centroids. AIR maintains documentation providing step-by-step instructions for processing the centroid related files supplied by AIR’s vendor. AIR performs quality control measures to verify the positional accuracy of the vendor-supplied population centroids and ensure their appropriateness. ¾ Overlay of the population-weighted centroids with the ZIP Code boundaries ¾ Display of the 2004 census block locations and their corresponding population values ¾ Independent generation of population weighted centroids for each ZIP Code © 2005 AIR Worldwide Corporation G-4 Units of Measurement Units of measure are clearly identified for both inputs and outputs. Model outputs of length are provided in statute miles, wind speed in statute miles per hour and central pressure in millibars. Input to the damage function is based on one-minute sustained wind speeds, which is consistent with currently used wind measurement units. Conversion of ten-minute averaging wind speed to one-minute sustained wind is based on accepted engineering relationships and varies from 1.10 to 1.36, as a function of land use/land cover. © 2005 AIR Worldwide Corporation G-5 Independence of Model Components All components of the AIR model are theoretically sound and independently derived. Each component is independently validated. © 2005 AIR Worldwide Corporation 2004 Meteorological Standards © 2005 AIR Worldwide Corporation M-1 Official Hurricane Set The storm set used by AIR is the latest updated Official Storm Set, supplemented with hurricanes from the 2004 season. • 2004 Alex, Tropical Cyclone Report: Hurricane Alex, by James Franklin of NHC on Oct. 26, 2004 • 2004 Charley, Tropical Cyclone Report: Hurricane Charley, by Richard J. Pasch, Daniel P. Brown, and Eric S. Blake of NHC on Jan. 5, 2005 • 2004 Frances, Tropical Cyclone Report: Hurricane Frances, by John L. Beven II of NHC on Dec.17, 2004 • 2004 Gaston, Tropical Cyclone Report: Hurricane Gaston, by James L. Franklin, Daniel P. Brown and Colin McAdie of NHC on Feb. 16, 2005 • 2004 Ivan, Tropical Cyclone Report: Hurricane Ivan, by Stacy R. Stewart of NHC on Feb. 11, 2005 • 2004 Jeanne, Tropical Cyclone Report: Hurricane Jeanne, by Miles B. Lawrence and Hugh D. Cobb of NHC on Jan.7, 2005 © 2005 AIR Worldwide Corporation M-2 Hurricane Characteristics Methods for depicting all modeled hurricane characteristics are based on information documented in the scientific literature or on research conducted by AIR and accepted by the Commission. To bring the gradient wind at radius of maximum winds down to 10-m height level, NWS #23 (page 24) suggests applying a reduction factor K. The value of this factor is 0.9. V 10m = KVgradientwindlevel Outside the radius of maximum winds, AIR uses the suggested relative wind profiles from NWS #23 (page 27) A recent study by Franklin et .al. (2003) suggests that the ratio between 10-m surface wind and the wind at 700mb is 0.91 at radius of maximum winds. This understanding based on high resolution GPS sondes is consistent with what was put forward in NWS #23. © 2005 AIR Worldwide Corporation M-3 Landfall Intensity The AIR hurricane model uses maximum one-minute average sustained wind speeds, which are valid for 10-meter elevation, to define intensity. The upper limits of wind speeds in the AIR hurricane model conform to the limits as defined by the Saffir-Simpson scale. Since the AIR model follows each simulated hurricane from the time of its inception until it dissipates, multiple landfalls and bypassing hurricanes are part of the simulation.
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