Post Date July 29, 2012 – South Carolina car insurance regulators will be forming a panel of experts which will study the “Black Box” catastrophe models which are computer programs that impact property and casualty insurance rates.
Charleston, SC based The Post and Courier Newspaper reported recently that the State’s Department of Insurance will form the said panel that will include a meteorologist who is an expert on hurricanes, an engineer that has expertise on high winds and its effects on structures, and an South Carolina Car insurance actuary that have analyzed catastrophe models. SC Department of Insurance spokesperson, Ann Roberson; announced that plan for forming such panel has been in works for months now.
South Carolina Car Insurance Officials To Study Catastrophe Models
“Black Box” catastrophe models started in the early 1990s after Hurricane Andrew brought great amount of damages to Florida that South Carolina car insurance companies had never predicted. These devices have been in use to predict potential losses for Property and Casualty Insurance Companies to justify increases on Homeowners and Auto Insurance Rates. However, how these catastrophe models do their calculations is being kept secret by the catastrophe-modeling companies, thus the name “Black Box.”
Michael Young, senior director of model product management of Risk Management Solutions disclosed that newer models include information on how storms will decay on landfall, and calculations suggest that losses will be greater than previously thought. Young said that catastrophe models make the Property & Casualty Insurance market more stable.
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