January 13, 2005
AIR Provides Insurers With Means to Analyze the Impact of Florida's New Deductible Law
AIR Worldwide Corporation has incorporated Florida's recently mandated annual hurricane deductible into its detailed catastrophe modeling system. Starting immediately, AIR can analyze the impact of the deductible changes on insurer portfolios.
"It is critical that we quickly understand how this new legislation will impact our book of business, since we may need to file rate adjustments before May 1," said Michael Cratem, vice president at Sunshine State, which writes a majority of its business in Florida. "AIR's ability to analyze the impact of calendar-year hurricane deductibles will provide insurers with the information necessary to ensure they are charging appropriate rates and to support rate filings."
The state of Florida bore the brunt of the damage from the 2004 hurricane season. ISO's Property Claim Services unit estimated that the state incurred almost $18 of the $22 billion total insured losses. According to the Florida House of Representatives, at least 30,000 policyholders experienced damage from two or more hurricanes, prompting the new legislation.
The new law, which takes effect on new or renewing policies starting on May 1, 2005, states residential policyholders will now have an annual hurricane deductible that would cover multiple events. Once the deductible is exhausted, losses from any additional hurricanes that year would be subject to the "all other perils" deductible for the policy, which is typically $500. Hurricane deductibles in Florida typically range from 2 to 5 percent of the insured value of the home.
"The action recently taken by Florida lawmakers will impact insurer portfolios in the coming year and may prompt some to file applications for rate changes," said Uday Virkud, senior vice president at AIR Worldwide Corporation. "The flexible architecture of our catastrophe models and systems enables AIR and our clients to rapidly respond to the deductible changes enacted by the state of Florida."
Posted by Tom Troceen