FLORIDA PUBLIC HURRICANE LOSS MODEL 5.0 Submitted in compliance with the 2011 Standards of the Florida Commission on Hurricane Loss Projection Methodology Revision Submitted on July 12, 2013 FPHLM V5.0 2013 1 Model Identification Name of Model and Version: Florida Public Hurricane Loss Model 5.0 Name of Modeling Organization: Florida International University Street Address: International Hurricane Research Center, MARC 360 City, State, ZIP Code: Miami, Florida 33199 Mailing Address, if different from above: Same as above Contact Person: Shahid S. Hamid Phone Number: 305-348-2727 Fax: 305-348-1761 E-mail Address: [email protected] Date: July 12, 2013 FPHLM V5.0 2013 2 July 12, 2013 Chair, Florida Commission on Hurricane Loss Projection Methodology c/o Donna Sirmons Florida State Board of Administration 1801 Hermitage Boulevard, Suite 100 Tallahassee, FL 32308 Dear Commission Chairman: I am pleased to inform you that the final version of 5.0 of Florida Public Hurricane Loss Model is ready for review by the Commission. The FPHLM model has been reviewed by professionals having credentials and/or experience in the areas of meteorology, engineering, actuarial science, statistics and computer science; for compliance with the Standards, as documented by the expert certification forms G1-G7. Enclosed are 7 bound copies of our submission, which includes the summary statement of compliance with the standards, the forms, and the submission checklist. Please contact me if you have any questions regarding this submission. Sincerely, Shahid Hamid, Ph.D., CFA Professor of Finance, and Director, Laboratory for Insurance, Economic and Financial Research International Hurricane Research Center RB 202B, Department of Finance, College of Business Florida International University Miami, FL 33199 tel: 305 348 2727 fax: 305 348 4245 Cc: Kevin M. McCarty, Insurance Commissioner FPHLM V5.0 2013 3 Statement of Compliance and Trade Secret Disclosure Items The Florida Public Hurricane Loss Model v5.0 is intended to comply with each Standard of the 2011 Report of Activities released by the Florida Commission on Hurricane Loss Projection Methodology. The required disclosures, forms, and analysis are contained herein. The source code for the loss model will be available for review by the Professional Team. FPHLM V5.0 2013 4 Model Submission Checklist 1. Please indicate by checking below that the foll owing has been include d in your subm ission documentation to the Florida Commission on Hurricane Loss Projection Methodology. Yes No Item X 1. Letter to the Commission a. Refers to the certification forms and s tates that professionals ha ving credentials and/or experience in the areas of meteorology, engineering, actuarial science, statistics, and computer science have reviewed the model for compliance with the X standards X b. States model is ready to be reviewed by the Professional Team X c. Any caveats to the above statements noted with a complete explanation 2. Summary state ment of co mpliance with each individual standard and the data and X analyses required in the disclosures and forms 3. General description of any trade secret information the modeling organization intends X to present to the Professional Team X 4. Model Identification X 5. Seven (7) Bound Copies (duplexed) X 6. Link containing: X a. Submission text in PDF format X b. PDF file highlightable and bookmarked by standard, form, and section c. Data file names include abbreviated name of m odeling organization, standards X year, and form name (when applicable) X d. Form S-6 (if required) in ASCII and PDF format X e. Forms M-1, M-3, V-2, A-1, A-2, A-3, A-4, A-5, A-7, and A-8 in Excel format X 7. Table of Contents 8. Materials consecutively numbered from beginning to end starting with the first page X (including cover) using a single numbering system 9. All tables, graphs, and o ther non-text items consecutively num bered using whole X numbers X 10. All tables, graphs, and other non-text items specifically listed in Table of Contents X 11. All tables, graphs, and other non-text items clearly labeled with abbreviations defined 12. All column headings shown and repeated at the top of every subsequent page for forms X and tables 13. Standards, disclosures, and forms in italics, modeling organization responses in non- X italics X 14. Graphs accompanied by legends and labels for all elements X 15. All units of measurement clearly identified with appropriate units used 16. Hard copy of all forms included in a submission document Appendix except X Forms V-3, A-6, and S-6 FPHLM V5.0 2013 5 2. Explanation of “No” responses indicated above. (Attach additional pages if needed.) Florida Public Hurricane Loss July 12, 2013 Model 5.0 Model Name Modeler Signature Date FPHLM V5.0 2013 6 Table of Contents GENERAL STANDARDS ......................................................................................................... 16 G-1 Scope of the Computer Model and Its Implementation ................................................. 16 G-2 Qualifications of Modeling Organization Personnel and Consultants ......................... 117 G-3 Risk Location ............................................................................................................... 125 G-4 Independence of Model Components ........................................................................... 127 G-5 Editorial Compliance .................................................................................................... 128 Form G-1 ................................................................................................................................. 129 Form G-2 ................................................................................................................................. 130 Form G-3 ................................................................................................................................. 131 Form G-4 ................................................................................................................................. 132 Form G-5 ................................................................................................................................. 133 Form G-6 ................................................................................................................................. 134 Form G-7 ................................................................................................................................. 135 METEOROLOGICAL STANDARDS .................................................................................... 136 M-1 Base Hurricane Storm Set ............................................................................................ 136 M-2 Hurricane Parameters and Characteristics .................................................................... 138 M-3 Hurricane Probabilities ................................................................................................. 146 M-4 Hurricane Windfield Structure ..................................................................................... 148 M-5 Landfall and Over-Land Weakening Methodologies ................................................... 156 M-6 Logical Relationships of Hurricane Characteristics ..................................................... 161 Form M-1: Annual Occurrence Rates ..................................................................................... 163 Form M-2: Maps of Maximum Winds ................................................................................... 168 Form M-3: Radius of Maximum Winds and Radii of Standard Wind Thresholds ................. 174 VULNERABILITY STANDARDS ........................................................................................... 179 V-1 Derivation of Vulnerability Functions ......................................................................... 179 V-2 Derivation of Contents and Time Element Vulnerability Functions ............................ 237 V-3 Mitigation Measures ..................................................................................................... 241 Form V-1: One Hypothetical Event ........................................................................................ 245 Form V-2: Mitigation Measures – Range of Changes in Damage ......................................... 252 Form V-3: Mitigation Measures – Mean Damage Ratio ........................................................ 255 ACTUARIAL STANDARDS ................................................................................................... 266 A-1 Modeling Input Data .................................................................................................... 266 A-2 Event Definition ........................................................................................................... 275 A-3 Modeled Loss Cost and Probable Maximum Loss Considerations .............................. 276 A-4 Policy Conditions ......................................................................................................... 280 A-5 Coverages ..................................................................................................................... 283 A-6 Loss Output .................................................................................................................. 286 Form A-1: Zero Deductible Personal Residential Loss Costs by ZIP Code ........................... 290 Form A-2: Base Hurricane Storm Set Statewide Loss Costs .................................................