The system measures catastrophe risk to residential and commercial property in all parts of the United States affected by Hurricanes. To Date, Untested Regardless of DeMartini's comments, plenty of people have concerns about the accuracy of disaster modeling. That's true among actuaries, for instance, who used to put together disaster insurance pricing before 1992's Hurricane Andrew, and state insurance regulators, who must approve disaster insurance rates charged to consumers and businesses. And most agree that investors ask few if any questions. To date there appears to be somewhere between 60 and 80 of the most sophisticated mutual and pension funds, reinsurers and others investing in the securities, although that number is expected to grow.
Inadequate information generates unwillingness to supply insurance.
It also dampens consumer demand for insurance products, as lack of hard exposure analysis makes it difficult to tell consumers a straight story justifying price and credit quality. Whatever the modelers say,that there's a one in 100 or one in 500 chance a catastrophe will occur,I think it's the luck of the draw. Whether you have an occurrence next year or in 2080, there isn't enough experience to prove how well these models work. Even a hundred years of experience is not sufficient. The only way to evaluate these is to wait 10,000 years.