Setting Storm Surge and Precipitation Flood Options

 

Storm surge is an abnormal rise in sea level accompanying a hurricane or other storm. You can include an estimate of the separately modeled storm surge losses when calculating losses for tropical cyclone events during a catastrophe peril analysis.

Precipitation flooding, which is modeled only for Japan, India, Australia, and Caribbean Tropical Cyclone exposures, accounts for flooding that accompanies typhoons. You can include an estimate of the separately modeled precipitation flood losses when calculating losses for tropical cyclone events.

  Storm surge and precipitation flood do not apply for workers' compensation policies.

The following two options are available:

         Use the peril code "PSH" to identify and enter coverage for policies that are specifically covered for storm surge or "PPH" for precipitation flood damage. Policies that include the PSH peril (including policies coded for All Perils [PAL]) are covered for 100% of the storm surge value by default. Policies that include the PPH peril (including policies coded for All Perils [PAL]) are covered for 100% of the precipitation flood value by default. You can also include separate policy and reinsurance terms for the PSH or PPH peril if separate terms apply for this peril.

         Include the percent of the storm surge or precipitation flood loss in wind loss estimates. This option applies only for policies not specifically covered for flood, and you can set the percent by line of business.

 

Note the following default percentages for precipitation flood and storm surge that Touchstone includes in wind loss estimates:

         For all United States and World event sets, the storm surge default is 5%.

         When a world event set is selected, the storm surge default (5%) is applied to all exposures.

         For Japan event sets, the storm surge default is 100%.

         For all other event sets, the storm surge default is 10%.

         You can modify the storm surge value up to 100%.

         The precipitation flood default is 100%.

To set the storm surge or precipitation flood peril options:

1.      Create a new catastrophe peril analysis. For more information, see Creating a New Catastrophe Peril Analysis.

2.      On the Analysis Settings pane, click next to the Storm Surge or Precipitation Flood check box.

3.      In the Storm Surge Options dialog box or Precipitation Flood Options dialog box, select a line of business and then enter the percent that you want to use. If you are configuring an analysis in Portfolio Mode, and you have selected multiple analysis targets, Touchstone uses only the LOB percentages specified in the first analysis target listed in the Analysis Target field on the New Detailed Loss Analysis pane. In this case, AIR recommends that you run a separate analysis for each analysis target, where you can set the peril by LOB values for each analysis target.

4.      Click OK.

Application of Storm Surge and Precipitation Flood

Touchstone applies storm surge and precipitation flood differently depending on the following two conditions:

       Whether you code your contract and/or location data specifically to include the storm surge peril (PSH or PAL - all licensed perils) or the precipitation flood peril (PPH or PAL - all licensed perils) when you import or add this data for a contract or location

       Whether you enable the Storm Surge or Precipitation Flood check box in the Perils area on the Analysis Settings pane when you configure a Detailed Loss Analysis

The combination of each of the options for these two conditions results in the following four scenarios:

Contract/Location Coded for Storm Surge Peril (PSH or PAL) / Precipitation Flood Peril (PPH or PAL)?

Storm Surge / Precipitation Flood Check Box in Detailed Loss Analysis Configuration Enabled?

Result

Yes

No

Touchstone does not include any storm surge / precipitation flood losses.

Yes

Yes

Touchstone runs the storm surge / precipitation flood model and includes 100% of storm surge / precipitation flood losses in the analysis results.

No

No

Touchstone does not include any storm surge / precipitation flood losses.

No

Yes

Touchstone runs the storm surge / precipitation flood model and adds the percentage of storm surge / precipitation flood losses, as specified in the Storm Surge Options dialog box or Precipitation Flood Options dialog box, to the wind losses in the analysis results.

  If the Storm Surge and Precipitation Flood sub-perils are not explicitly coded in your exposure data, you must select the Wind peril when configuring the loss analysis. You cannot get surge or precipitation flood leakage losses independently of Wind losses.

 

Including a Percentage of Storm Surge or Precipitation Flood by Line of Business

If a contract or location is not specifically covered for storm surge or precipitation flood, you may choose to configure Detailed Loss Analyses to include a percentage of storm surge or precipitation flood losses by line of business for the following reasons:

       You may choose to assume that you will pay some storm surge or precipitation flood losses, even if your policies do not specifically cover this peril. This condition is called "leakage" and typically applies to residential policies.

       You may not have the precise details that specify exactly which perils every policy covers. Therefore, you may want to assume that a certain percentage of your risks have storm surge or precipitation flood coverage. This condition typically applies to commercial policies or aggregate data.

 

 

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Touchstone V3.0 Updated December 01, 2016