In this last component of the AIR natural hazard models, insured losses are calculated by applying the specific policy conditions to the total damage estimates. Policy conditions may include deductibles by coverage, site-specific or blanket deductibles, coverage limits and sublimits, loss triggers, coinsurance, attachment points and limits for single or multiple location policies, and risk or policy specific reinsurance terms.

AIR’s models incorporate detailed distributions that account for uncertainty in both intensity and damage calculations. This explicit modeling of uncertainty allows, in turn, detailed probabilistic calculation of the effects of policy conditions. The model uses convolution techniques to propagate uncertainty throughout calculations at each stage of the insured loss calculation.

AIR’s modeling technology allows the user to input correlation factors (with guidance from AIR's Research and Modeling Team) to account for any potential correlation across locations, constructions types and/or coverages.