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Insurance panel reviews hurricane study
 

TALLAHASSEE, Fla. – April 23, 2007 – New research suggesting fewer hurricanes in the future, not more, may be ignored by a state commission reviewing computer models that help determine homeowners insurance rates.

It’s an important issue because one model under review by the commission assumes more hurricanes and far greater losses, thus helping justify higher insurance premiums.

Florida’s decision could affect homeowners in other states, too. On Friday, Louisiana’s insurance commissioner froze use of one of the same models, from Risk Management Solutions, pending Florida’s decision.

Bob Hunter, an insurance expert at the Consumer Federation of America who recently served as an adviser for Florida’s Insurance Commissioner, said state regulators shouldn’t let RMS choose just the science that justifies higher rates.

Randy Dumm, chairman of the Florida Commission on Hurricane Loss Projection Methodology, said he doubts research published this week by the National Oceanic and Atmospheric Administration can make the current review cycle, which began last month.

“Something like this would not be reflected in this series. It’s going to take awhile for any valid scientific findings to be incorporated into any future models,” said Dumm, a professor of real estate and business law at Florida State University. He also worked as an insurance agent and broker from 1985 to 1994.

The new study found that rising ocean temperatures will also generate more wind shear, or turbulence, which tends to break apart and weaken hurricanes.

Some previous studies suggested that warming oceans will generate more hurricanes. The Atlantic is also thought to currently be in a natural cycle of high activity, which may extend for 10 to 15 years.

Goal is price stability

Hunter said ignoring the new research would be wrong, since the whole field of catastrophe modeling was designed to bring long-term price stability to the insurance market.

“You have to factor in everything. The regulators are way behind the curve,” Hunter said.

Insurance Consumer Advocate Bob Milligan said he thinks credible new science with the potential to lower rates should “absolutely” be considered by the state review commission.

Dumm said that “truly noteworthy” science or “some momentous shift” might be considered by the commission, but declined to comment on how those terms would be defined.

According to NOAA, the new research appears to meet some of Dumm’s criteria.

“While other studies have linked hurricane intensity to global warming, this is the first published study to indicate that changes to vertical wind shear seen in future climate projections would likely diminish the frequency and intensity of hurricanes,” said a NOAA statement.

The authors of the study were Gabriel Vecchi, a NOAA scientist based in Princeton, N.J., and Brian Soden of the University of Miami. They used 18 recent computer climate models to estimate how wind shear might weaken storms that have formed in the Atlantic and Pacific oceans.

“It’s the first time it had been looked at so comprehensively,” Vecchi said, and 14 of the 18 models showed the turbulence would weaken storms, perhaps by as much as 30 percent.

In other words, the two changes driven by global warming might cancel each other, meaning the average number of hurricanes would not increase. Wind shear would not slow a projected rise in sea levels.

Vecchi and Soden said their study accepts that global warming is real and will continue this century.

Roger Pielke Jr., an expert on climate change models at the University of Colorado, said the public and policy-makers need to realize science can’t deliver exact answers about climate change.

“I think the reality is for the foreseeable future, the future’s going to be really cloudy. Most scientific studies involve a tremendous amount of uncertainty,” Pielke said.

“This is how science advances. I’d urge caution in putting too much weight on the latest study,” since there will probably be many more reports showing different possibilities.

RMS model called premature

Pielke has also urged caution over the RMS model, calling it “very much premature, scientifically.” Pielke wrote in his blog that the new RMS approach “is a recipe for price instability, exactly the opposite from what the consumer groups, and insurance commissioners, want.”

The RMS model assumes higher hurricane activity from 2006 to 2010 and has been criticized by scientists and ethics experts for relying on questionable assumptions and for not being published in a peer-reviewed scientific journal before its launch.

RMS chief research officer Robert Muir-Wood agreed that the findings of the new report appear to be significant.

He said the results “identify an important factor associated with global warming that could eventually act to reduce hurricane formation and intensification during the 21st century.”

Muir-Wood predicted much scientific debate over which factors might have the greatest impact on hurricane frequency and intensity over the next 50 to 100 years.

He said the RMS model factors in researchers’ consensus about the current natural cycle of high activity in the Atlantic, so it is valid.

Muir-Wood said the company will perform annual updates to activity rates, but did not directly answer the question of whether it will incorporate the findings by Vecchi and Soden.
 

Copyright © 2007 Tampa Tribune, Fla., Kevin Begos. Distributed by McClatchy-Tribune Business News.