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Survey Report

Catastrophe Analytics Briefing

10th anniversary of Hurricane Ike


August 15, 2018

The Willis Re Catastrophe Analytics Briefing explores the use of historical data from Hurricane Ike for reinsurance limit decisions and other business applications.

2018 marks the 10th anniversary of Hurricane Ike, a key benchmark event for Texas hurricane risk. The Catastrophe Analytics Briefing discusses the use of historical scenario events for reinsurance limit purchasing decision validation and other business applications, with the help of six “Ike-like” scenario events from AIR and RMS models.

Key takeaways:

  • Hurricane Ike’s impact on current exposure in Texas is estimated to be in the order of $12.70 to $12.84 billion, compared to $9.8 billion at the time of the event as per Property Claim Services.
  • Hurricane Ike has been a key benchmark event for Texas hurricane risk quantification and is often used as a device to answer the question, “What would be the impact to a portfolio if Hurricane Ike happened again today?”
  • Because a future hurricane would not have the exact characteristics of Ike, for the purpose of using historical storms as scenario events, we have identified six storms (A to F) from both AIR and RMS models that are similar to Hurricane Ike. These storms result in a wide variety of impacts due to subtle differences in storm track location, size, and intensity.
  • Select “Ike-like” events in RMS produce losses in the range of $7.8 and $43.4 billion, and events in AIR produce losses in the range of $2.7 to $16.4 billion to the Texas insurance industry.
  • When using historical events for deterministic scenario loss modeling for the purpose of managing hurricane risk, stress testing risk tolerance levels and reinsurance limit purchasing decisions, we suggest considering various landfall points and angles relative to the coastline in addition to the strength of the storm and size of the wind field.
  • Willis Re is currently developing a systematic process and method to consider variations of key historical events in terms of their landfall points and storm paths in order to generate storm wind footprints and corresponding loss estimates for hurricane risk management along the U.S. coast.

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Title File Type File Size
10th anniversary of Hurricane Ike PDF .8 MB
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