An increasingly important aspect of the rate filing process is the quantification and justification of the catastrophe risk component of proposed rates. Catastrophe modeling has come to play an instrumental role in bridging the information gap between insurance companies, on the one hand, and the various departments of insurance and their constituencies, on the other, about the nature and significance of catastrophe risk.

Companies choose AIR to support their rate filings because of our considerable experience in this arena. AIR modeling methodology and analyses are widely known and generally accepted by state regulatory authorities. We tailor our analyses to the ratemaking requirements of each state and we provide detailed model documentation and expert testimony to support rate filings.

Several states have adopted a formal model approval process. In 1997, AIR's hurricane model became the first model to meet all of the rigorous standards of the Florida Commission on Hurricane Loss Projection Methodology and was approved for use in setting residential insurance rates in that state. AIR has met the Commission's evolving standards every year since. In addition, AIR was the first to file a hurricane model in Louisiana and we are currently working with regulators in Texas as they create a formal model review process.

AIR’s models have supported rate filings related to wind perils in 22 states and the District of Columbia. Our earthquake models have been used in rate filings in 12 states, as illustrated in the map below.