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Hurricane Mitigation Plans. Michael A. Walters FCAS, MAAA CAS Catastrophe Seminar October 16, 2000. Topics of Discussion. Creating a mitigation/class plan in Florida Could have used a single model Did use multiple sources Deciding cost/effective class variables

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hurricane mitigation plans

Hurricane Mitigation Plans

Michael A. Walters FCAS, MAAA

CAS Catastrophe Seminar

October 16, 2000

topics of discussion
Topics of Discussion
  • Creating a mitigation/class plan in Florida
  • Could have used a single model
  • Did use multiple sources
  • Deciding cost/effective class variables
  • Standards and considerations
  • Selecting a base class
  • Adjusting to new base class
creating a mitigation class plan
Creating a mitigation/class plan
  • Florida hurricane is already separate
  • In Windpool (FWUA) wind coverage
  • Split out Other Wind
  • Goal: mitigation plan plus rate level
  • Identify true costs
  • Incentive for insureds to mitigate home
  • Transition plan: stagger premium increases
  • Payback in a few years of premium savings
could have used a single model
Could have used a single model
  • For base class, use single house in each zip code at base coverage
  • For each class, run model for single house by zip code
  • Track relationship to base by zip
  • Use mapping software to group similar zip code relationships
  • Publish relativities by zone or statewide
florida did use multiple sources
Florida: did use multiple sources
  • Decide what variables to include
  • Survey sources for relativities
  • Use several zip codes around state
  • Delphi technique for outliers
  • Apply actuarial judgment
  • Peer review by engineering experts
decide rating variables
Decide rating variables
  • Roof - shape, covering, waterproof sheathing, pitch, overhang
  • Connections - straps, nailing (size,spacing)
  • Windows and Doors - shuttering, garage door size & bracing, glazing
  • House Features - stories, porches, construction
  • Environment - terrain, debris exposure
standards
Standards
  • Homogeneous
    • No clear subsets of large different loss potential
    • Reasonably related to loss hazard
  • Well Defined
    • Exhaustive and mutually exclusive
    • No ambiguity in placement
    • No manipulation by insureds
  • Practical
    • Reasonable cost to administer
    • Able to be tested by actual loss data
considerations
Considerations
  • Prioritize items that insureds can change
  • Use results from mitigation programs
  • Combine categories to control number of classes
  • Measure interaction among variables
  • May need on-site survey by independent professionals
selecting adjusting base class
Selecting/Adjusting Base Class
  • Base Class
    • Generally the prevailing condition
    • Discounts for other classes
    • Sample: gable roof, no shutters, no roof clips
  • Adjust Loss Costs to New Base
    • Estimate distributions of classes
    • Use class relativities to calculate off-balance
base class assumptions italics
Base Class Assumptions (italics)
  • Roof
    • Shape - gable unbraced, gable braced, hip, flat
    • Cover - Shingle, tile, slate, metal, poured concrete
    • Waterproof sheathing underlayment - No, yes
    • Pitch - <10d, 10-30, >30 degrees
    • Overhang - <16,16-36, >36 inches
  • Connections
    • Hurricane Clips - No, yes: at roof, at foundation
    • Sheathing Attachment - 6d nails, 8d nails
base class assumptions italics11
Base Class Assumptions (italics)
  • Windows and Doors
    • Shuttering - None, ordinary, hurricane resistant (debris impact)
    • Glass patio doors - Yes, no
    • Garage doors - single-wide, double-wide; braced, unbraced
    • Laminated glass - No, yes
base class assumptions italics12
Base Class Assumptions (italics)
  • House Features
    • Number of stories - one, >one
    • Porches/canopies/carports - Yes, no
    • Construction - frame, masonry: reinforced?
    • Year Built/Code Enforcement - before 1995/not enforced, other
  • Environment
    • Suburban light tree cover, dense
    • Other - waterfront, urban, rural