KCC US Hurricane Model Version 5.0 Earns Certification from Florida Commission on Hurricane Loss Projection Methodology
Karen Clark & Company (KCC), a leader in catastrophe risk modeling, is proud to announce that its US Hurricane Reference Model Version 5.0 has been certified by the Florida Commission on Hurricane Loss Projection Methodology (FCHLPM). Notably, KCC is the first model vendor to achieve certification under the latest FCHLPM standards, reaffirming its position as an innovator in the field of hurricane risk assessment.
The certification underscores KCC’s commitment to delivering cutting-edge solutions that meet the rigorous scientific, technical, and actuarial benchmarks set by the FCHLPM. As hurricanes continue to pose escalating risks due to climate change and evolving building practices, the updated KCC model ensures that insurers, reinsurers, and regulators have access to the most reliable and up-to-date information for pricing, underwriting, and risk management decisions.
Key Enhancements in Version 5.0
The latest iteration of the KCC Hurricane Model incorporates several significant advancements, reflecting the company’s dedication to refining its methodologies and assumptions to align with current data and industry trends. Among the key updates are:
- New Secondary Building Characteristics: The model now accounts for additional secondary building features that influence how structures respond to hurricane conditions. These enhancements provide a more granular understanding of how specific attributes—such as roof materials, window protections, and foundation types—affect vulnerability.
- Updated Vulnerability Functions: KCC engineers have developed new vulnerability functions for appurtenant structures, such as garages and sheds, which are often overlooked but can significantly impact overall property damage. Additionally, the model includes revised vulnerability functions for manufactured homes, a critical segment given their heightened susceptibility to hurricane-related damage.
- Support for Law and Ordinance Coverage: Recognizing the growing importance of compliance with local building codes and regulations, Version 5.0 introduces full support for modeling law and ordinance coverage. This feature allows insurers to better assess the financial implications of rebuilding or repairing structures in accordance with updated legal requirements.
- Roof Actual Cash Value Endorsements: The update also integrates capabilities for modeling roof actual cash value endorsements, enabling more accurate assessments of claims related to roof damage—a frequent and costly outcome of hurricanes.
Dr. Shaoning Li, Principal Engineer at KCC, emphasized the significance of these updates: “Version 5.0 of the KCC Hurricane Model includes various advancements to vulnerability, reflecting how different building characteristics can withstand hurricane conditions. By incorporating these functions, we ensure that the underlying assumptions and methodologies reflect the latest residential structure inventories, building codes, and hurricane mitigation strategies.”
Incorporating Climate Data and Evolving Risks
In addition to structural and coverage enhancements, Version 5.0 integrates two additional years of climate data, ensuring the model remains aligned with the most recent trends in hurricane activity. This is particularly crucial as climate change continues to alter the frequency, intensity, and behavior of storms. By staying ahead of these shifts, KCC provides clients with a forward-looking perspective that accounts for both historical patterns and emerging risks.
Glen Daraskevich, Senior Vice President at KCC, highlighted the importance of the FCHLPM certification process: “KCC is pleased to have completed the FCHLPM certification process, which remains the industry’s benchmark for evaluating model assumptions and methodologies. The rigorous review gives insurers and regulators confidence that the KCC model meets the highest scientific, technical, and actuarial standards, particularly as the risks associated with hurricanes continue to evolve.”
The Role of the Florida Commission on Hurricane Loss Projection Methodology
Established in 1995, the Florida Commission on Hurricane Loss Projection Methodology (FCHLPM) plays a pivotal role in ensuring the reliability and accuracy of hurricane loss models used by insurers and regulators. The commission conducts thorough reviews and audits of model methodologies, focusing on factors such as data quality, statistical techniques, and adherence to regulatory requirements. Certification from the FCHLPM is widely regarded as a hallmark of excellence, validating that a model adheres to the best practices in the industry.
For KCC, achieving certification under the latest FCHLPM standards is not only a testament to the robustness of its model but also a reflection of its commitment to transparency and collaboration with stakeholders. The certification process involves extensive scrutiny, including peer reviews and validation against real-world data, ensuring that the model delivers actionable insights that insurers can trust.
Empowering Insurers in an Era of Increasing Risk
Hurricanes remain one of the most destructive and costly natural disasters, posing significant challenges for insurers and reinsurers. With losses from these events continuing to rise—driven by factors such as urbanization, population growth in coastal areas, and climate change—the need for accurate and reliable risk assessment tools has never been greater.
The KCC US Hurricane Model Version 5.0 addresses this need by providing insurers with advanced capabilities to evaluate and manage hurricane risks. By incorporating the latest scientific research, engineering insights, and climate data, the model enables insurers to make informed decisions about pricing policies, managing portfolios, and preparing for potential catastrophic events.
Moreover, the model’s enhanced support for specific coverages, such as law and ordinance and roof actual cash value endorsements, ensures that insurers can offer tailored solutions that meet the unique needs of policyholders. This level of precision not only improves risk management but also enhances customer satisfaction and trust.
A Commitment to Innovation and Excellence
The certification of Version 5.0 reinforces KCC’s reputation as a leader in catastrophe risk modeling. By continuously refining its methodologies and embracing the latest advancements in science and technology, KCC remains at the forefront of efforts to mitigate the impacts of hurricanes and other natural disasters.
As Glen Daraskevich noted, “The risks associated with hurricanes are constantly evolving, and so must our approach to modeling them. At KCC, we are committed to providing our clients with the tools they need to navigate these challenges effectively. Achieving FCHLPM certification is a testament to our unwavering focus on innovation, accuracy, and reliability.”
About Karen Clark & Company
Karen Clark & Company (KCC) provides advanced models, innovative software, and comprehensive consulting services for deeper insight into climate, weather, and catastrophe risk. KCC professionals are globally recognized experts in catastrophe modeling and risk management who work with company executives to enhance business strategies, competitive advantage, and financial results. KCC models cover tropical cyclones, extratropical cyclones, severe convective storms, winter storms, wildfires, floods, and earthquakes in over 80 countries. For more information, please visit www.karenclarkandco.com.
