Will new hurricane model raise your insurance rates?- (Read Full Story)
The threat of hurricane damage has pushed Texas home insurance rates sky high for many coastal residents. But inland homeowners soon may be paying more, too, thanks to an updated model some Texas insurance companies use to help set insurance rates. The revised model by Risk Management Solutions (RMS) has found that risk from wind damage in some coastal locations is lower than expected, but is higher than expected in some inland areas.
Reams of new wind speed measurements indicate that hurricanes don't fall apart over land as much as previously believed, meaning they can inflict more damage on inland areas.
This is the first major overhaul to the RMS model since 2003. The new model includes information collected during Hurricane Katrina, which wracked the Gulf Coast in 2005, and the endless parade of hurricanes that hit Florida in 2004.
"The information for the most recent storms dwarfs the data" collected in previous hurricanes, says Ryan Ogaard, senior vice president of RMS.
Homeowners insurance companies use the data to help prove to states that they have enough capital to pay insurance claims in the event a hurricane pummels a state, he says the new model in a bellwether state Florida rigorously checks hurricanes models and is seen as a bellwether for other coastal states when it comes to Texas homeowners insurance and hurricanes.
