JUNE 20218Catastrophe modeling, often called CAT modeling, is essential in insurance and risk management. CAT modeling is used to determine the probability of natural disasters and the likely financial impact. Additionally, CAT modeling can be used to assess the risk of hurricanes, wildfires, earthquakes, floods, storms, terrorism, and other major catastrophes. The Problem of Inaccurate ModelsWe've all experienced the frustration of inaccurate weather forecasts before. The weather report calls for sunny skies, but then a rainstorm soaks your picnic.Inaccurate risk assessments are similar in a way, but much more serious. For example, in 2017, Hurricane Harvey flooded the Houston area and caused $125 billion in damage. The town of Hitchcock saw severe flooding, but only one in four homes had flood insurance. According to Bloomberg, FEMA had not updated flood risk maps for the area since 1983, and residents might not have been aware of their true flood risks. The Threat is IncreasingNatural disasters have always been a threat, but now that threat may be getting worse. Wildfires, hurricanes, tornadoes, and other natural disasters cost the United States HOW CAT MODELING IS IMPROVING THE CUSTOMER EXPERIENCEBy Diane Elrod, VP of Agency Operations, BXS InsuranceIN MY OPINION
< Page 7 | Page 9 >