Folks disappointed would be the word that describes my reaction to Becky Mowbray’s story that appeared in today’s T-P under the lede New Orleans area deserves better insurance options. I’ll be so bold and suggest that Becky contact Paige St John at the Herald Tribune and Karen Clark, founder of AIR Worldwide because that story in today’s paper was a stinker on several levels IMHO.
The public outreach and education never ends folks. 😉
A Slabbed reader comment by Angela Rouse:
I was forwarded the link to your site, specifically the one that references my name . . . “stupid is as stupid does” by a friend who felt she had hit a Google landmine.
I suppose it is easy to write stuff like that when you don’t actually have to sign a name to it.
Anyway, because my post you address is no longer accessible, I have copied it below for you to post if you choose to give your readership the benefit of actually reading what you critique with such vehemence.
And, for the record, I grew up in Louisiana, and am extremely sensitive to the travails of life there during and after Hurricane Katrina. Continue reading “From the mailbag: Stupid is as stupid does part deux. Angela Rouse of the Kansas City Star would like a word with the Slabbed Nation. A Guest Post.”
OK folks, I’ve written a good bit on weather modeling most of which in one way shape or fashion has its roots in the work of Karen Clark, a woman with a keen financial intellect, that literally pioneered the field. Her story is reminiscent of HAL 9000 and a South Park episode. It is also my considered opinion Ms Clark is one of the good guys in the insurance wars. I mentioned this general topic and its importance with the last State Farm rate hike here in Mississippi using very plain english but no journalist here in Mississippi was up to the challenge of reporting it. I say that because if there is one area in the rate setting process that is completely suspect it would be in the loss assumptions indicated by the models. These concepts are equally applicable in other states besides Mississippi that now face insurance rate hikes such as our neighbor Alabama. Finally in the land where people get it, FLOIR Commish Kevin McCarty busted Allstate using bogus short-term models to calculate a 65% rate hike in Florida in 2008.
Besides Sop, Karen Clark understands the implications. She left the company she founded, AIR Worldwide (most likely forced out IMHO), founded another company and went public with her concerns on how the information produced by those models was being misused. It was no surprise to me then when a reader sent me this link from the National Underwriter:
Catastrophe modeling firms’ hurricane damage predictions overestimated insured losses for a second year, according to a catastrophe prediction consulting firm.
Karen Clark & Company in a report said models designed to project U.S. Atlantic hurricane insured losses for the five-year period ending in 2010 “have significantly overestimated losses for the cumulative 2006 through 2009 seasons.”
“Hurricane activity is very difficult to project because the Earth’s atmosphere is very complex and has many feedback mechanisms,” said the report. “Given all of the uncertainties, near-term projections do not have sufficient credibility to be used for important insurance applications such as product pricing and establishing solvency standards.”
Predictably Karen’s wayward babies were having none of it: Continue reading “Lets talk cat modeling and insurance rates: Karen Clark welcome to slabbed.”
Time is short for me today but one thing that stood out in the State Farm rate increase application was the use of models to calculate the cat risk assumptions that drive the rate up (and the rate app is woefully short on the assumptions used in these models). In Florida Allstate used very short term models that have proven highly inaccurate to justify rate increases there that Commissioner McCarty turned down. Additionally I highly recommend you contact Beatrice Garcia of the Miami Herald as she reported extensively on the use of those unapproved models back in early 2008. I’d also track down Karen Clark, the person who pioneered the use of weather modeling for insurance for additonal info. You guys need facts, not industry spin to challenge Mike Chaney and this bogus rate up from State Farm.
Weather modeling posts we’ve done on Slabbed:
How’s the weather model – December 2007
Insurance Weather Modeling – Others have questions too – December 2007
On the fallacies of the science behind statistical modeling – April 2008 Continue reading “Attention Mississippi Coast Media: Yes Dave Elliot and Doug Walker you guys too”