September 28th, 2011

Model Updates Cause Uncertainty

Posted at 1:00 AM ET

Over the past 12 months, the three main catastrophe modeling companies, AIR Worldwide (AIR), EQECAT and RMS have updated many of their products or launched models for additional countries. The changes relate to earthquake, wind and flood risks. Some of the updates have created uncertainty within the market, and their longer-term implications are not fully known at the time of writing.

Guy Carpenter has carefully considered the merits of each model change. For the first time, our model validation conclusions have resulted in recommendations for our clients that are not consistent with the vendors’ recommended best practices. Going forward, Guy Carpenter clients should expect specific advice from us regarding every significant model update. We will examine several significant model changes and assess their implications in the next series of GC Capital Ideas blog posts. 

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