Calif. firm creates
Hawaii hurricane
risk model

The software is designed for
insurers weighing the possibility
of re-entering the isle market

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By Lyn Danninger
ldanninger@starbulletin.com

A California-based company says it has come up with a more accurate way for insurers to assess hurricane risk in Hawaii.

RMS Risk Assessment is targeting its RMS Hawaii Hurricane model to insurers looking to re-enter the Hawaii market.

Following 1982's Hurricane Iwa, insurers lost $137 million. After Hurricane Iniki hit in 1992, they lost a further $1.6 billion.

After Iniki, many insurers stopped offering hurricane coverage, forcing the state to set up the Hawaii Hurricane Relief Fund in 1993 as a way to provide affordable hurricane insurance to homeowners.

Since 1997, more insurers have re-entered the market and the fund will be phased out by the end of this year.

RMS' new risk assessment software includes a database of more than 2,500 types of hurricane events that could occur in Hawaii; greater ability to assess risk from a hurricane that makes landfall on more than one island; and detailed representations on building vulnerability, including types of construction unique to Hawaii, said John Abraham, senior vice president with RMS.

For example, the model takes into account new techniques developed in Japan and the Caribbean where, like Hawaii, there are multiple islands, steep terrain and hurricanes can make landfall more than once, Abraham said.

New also is a wind model that looks at the impact of surface roughness and topography. Because wind speeds vary in different pockets of terrain, the new model combines the wind direction and modifies and adjusts it for a particular location. It's a big improvement on previous versions, Abraham said.

"Previous models looked at upstream surface roughness but were not as sophisticated and were not as good at differentiating wind speeds on a localized basis," he said.

Amori Ogata, former head of the Hurricane Relief Fund and now president of Zephyr Insurance Co. Inc., said it's too early to judge the effectiveness of the new RMS model against existing products. There are two other companies that produce risk models in the United States, Ogata said.

"I just don't know yet what makes this one different," he said.

AIG Hawaii's vice president and actuary, Mike Onofrietti, said he's familiar with RMS.

AIG uses a previous generation of the software produced by the company. But like Ogata, he wonders what makes the new product different.

Making accurate hurricane predictions is more difficult in Hawaii than in places like Florida and other eastern seaboard states that have frequent storms, Onofrietti said.

"The biggest problem here is there is no storm history," he said.

RMS started out with a database from the National Hurricane Center covering 52 years of historical activity when it began building its model, Abraham said.

"That includes all storms that move through the area, not just those that made landfall," he said.

Hawaii's unique building styles are also considered in the model.

To have a better idea of the types of structures present in Hawaii, RMS sent its program and project manager, Atul Khanduri, to Hawaii to get a view of all the conditions now included in the model.

For the first time, single wall construction, prevalent in much of Hawaii's housing, is included in the model. The type of building structure, combined with individual wind conditions at certain locations, have a major impact on how much damage is likely to occur with a particular storm, Khanduri said. Moreover, wind conditions differ greatly from island to island, he said.

"One major issue in Hawaii is topography. At the peaks of hills you get very high wind speeds so houses on the slopes have less chance of survival versus being located in a valley," he said.

Khanduri also noted the difference in design in much of Hawaii's housing compared to elsewhere. "You don't find this type of construction on the mainland," he said.

"Some of the houses sit untied and unbolted. You have a block of cement as a foundation. Posts aren't always anchored to the concrete and floors are framed with a timber post that rests unanchored on short masonry piers," he said.

RMS will unveil its new model at a Sept. 13 an insurers seminar in Honolulu.

Both Zephyr's Ogata and AIG's Onofrietti plan on attending the event.

Hurricane origins There are two different types of storms that affect Hawaii, RMS Risk Assessment Senior Vice President John Abraham says. Type 1: Generated east of Hawaii and moves west-northwest as it weakens. Type 1 storms originate off Mexico and the equatorial Pacific. Type 2: The more dangerous type of storm, is generated south of Hawaii and moves north. Both Iniki and Iwa were Type 2 storms.