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Th
e U
se o
f C
atas
tro
ph
e M
od
ellin
g f
or
Qu
anti
fyin
g a
nd
Map
pin
g R
isks
Rob
ert M
uir-
Woo
d P
hD
Feb
26th
2007
2C
onfi
dent
ial
Ris
k M
anag
emen
t S
olu
tio
ns
Larg
est d
evel
oper
of r
isk
mod
elin
gso
ftwar
e an
d so
lutio
ns
for
the
glob
al in
sura
nce
and
rein
sura
nce
mar
ket –
with
a
prin
cipa
l foc
us o
n na
tura
l and
man
-mad
e C
atas
trop
he r
isk
1100
em
ploy
ees
in p
rinci
pal o
ffice
s: U
S (
Cal
iforn
ia &
New
Je
rsey
), L
ondo
n, B
erm
uda,
Tok
yo, Z
uric
h an
d In
dia
(New
D
elhi
and
Hyd
erab
ad)
RM
S In
dia
empl
oys
700
-is
a le
adin
g In
dian
GIS
com
pany
an
d th
e fo
cus
of R
MS
Cat
astr
ophe
ris
k m
odel
ing
for
the
deve
lopi
ng w
orld
400
clie
nts
incl
udin
g al
mos
t all
the
maj
or in
sure
rs a
nd
rein
sure
rs, r
eins
uran
ce b
roke
rs, c
apita
l mar
kets
, go
vern
men
ts, c
orpo
ratio
ns e
tc.
Rec
ent e
stab
lishm
ent o
f clim
ate
chan
ge r
isk
prac
tice
3C
onfi
dent
ial
Cat
astr
op
he
Lo
ss M
od
ellin
g A
gen
da
Met
hodo
logy
Key
loss
ret
urn
perio
ds b
y pe
ril
Use
of s
cena
rios
to e
xplo
re d
isas
ter
prep
ared
ness
and
the
pote
ntia
l sys
tem
ic im
pact
s of
‘Sup
er C
atas
trop
hes’
Ris
k ra
ting
and
the
insu
ranc
e in
dust
ry
4C
onfi
dent
ial
Pro
bab
ilist
ic C
atas
tro
ph
e L
oss
Mo
del
ling
Calc
ulat
e Ca
lcul
ate
Dam
age
Dam
age
Asse
ss
Asse
ss
Earth
quak
eEa
rthqu
ake
Mot
ion
Mot
ion
Qua
ntify
Q
uant
ify
Fina
ncia
l Los
sFi
nanc
ial L
oss
Gen
erat
e St
och.
Gen
erat
e St
och.
Even
tsEv
ents
Appl
y Ap
ply
Expo
sure
Expo
sure
5C
onfi
dent
ial
Sto
chas
tic
Fau
lts
Un
ifo
rm
bac
kgro
un
d
Maj
or
so
urc
e se
gm
ents
Bac
kgro
un
d s
ub
-so
urc
e se
gm
ents
Sto
chas
tic
even
ts
: 42
,687
Mw
5.0
–8.
75
Mod
ellin
g E
xper
ienc
e
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onfi
dent
ial
Lo
cal s
oil
amp
lific
atio
n In
dex
Nat
iona
l Bur
eau
of S
oil
Surv
ey &
Lan
d U
se P
lann
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(1/5
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00)
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rega
ted
at th
e bl
ock
leve
l)
Mod
ellin
g E
xper
ienc
e
7C
onfi
dent
ial
RM
SI -
Vu
lner
abili
tyan
d E
xpo
sure
Mo
du
le f
or
Ind
ia
Vu
lner
abili
ty f
un
ctio
ns
–R
esid
enti
al –
By
bu
ildin
g c
lass
& c
ove
rag
e
–C
om
mer
cial
–B
y co
vera
ge
–In
du
stri
al –
By
cove
rag
e fo
r sm
all s
cale
an
d
larg
e in
du
stri
es
Exp
osu
re
–R
esid
enti
al, C
om
mer
cial
, In
du
stri
al B
uild
ing
s
–B
lock
leve
l res
olu
tio
n
45
67
89
1011
12
Woo
d
Ligh
t Met
alM
ud/ U
nbur
nt B
rick
Sto
neR
C
Bur
nt B
rick
8C
onfi
dent
ial
Mo
del
Res
olu
tio
n
Dis
tric
tB
ou
nd
ary
Var
iab
leR
eso
luti
on
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rid
s
(VR
G)
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0, 5
0 K
m
Mod
ellin
g E
xper
ienc
e
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dent
ial
Blo
ck le
vel L
oss
cost
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o 12
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o 10
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o 5
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to
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o 0.
50.
01 t
o 0.
10.
001
to
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all o
ther
s
RM
SI I
nd
ia E
arth
qu
ake
Cat
Mo
del
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isk
to
Res
iden
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Exp
osu
re
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dent
ial
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no
mic
Lo
ss in
200
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uja
rat
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n C
rore
s)
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e of
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aff
ecte
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:
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Port
Tru
st, H
indu
stan
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ever
, and
IFF
CO
Insu
ranc
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laim
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xpec
ted
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roun
d 10
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rore
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nom
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oss
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ujar
at E
arth
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Cro
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isk
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nn
ual
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ss
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dent
ial
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lon
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isk
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ia –
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loss
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nd
hra
P
rad
esh
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onfi
dent
ial
Co
mp
arat
ive
Cat
astr
op
he
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k
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pic
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yclo
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pic
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yclo
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Ear
thq
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arth
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ake
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alA
nn
ual
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ance
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ance
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bab
ility
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bab
ility
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dent
ial
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ake
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ake
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ake
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ake
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ake
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ial
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isto
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ake
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ico
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arth
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dent
ial
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Co
un
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k H
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ard
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ntry
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ake
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urke
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cal C
yclo
neE
arth
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e
17C
onfi
dent
ial
OE
CD
Co
un
trie
s: M
ost
Cat
astr
op
he
Pro
ne
(Lo
ss
mea
sure
d a
s %
of
Nat
ion
al G
DP
)
Cou
ntry
50yr
Los
s10
00yr
Los
s
Icel
and
Ear
thqu
ake
Vol
cano
Italy
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thqu
ake
Vol
cano
Japa
n E
arth
quak
eV
olca
no
Mex
ico
Ear
thqu
ake
Ear
thqu
ake
New
Zea
land
Ear
thqu
ake
Vol
cano
Por
tuga
lW
inds
torm
Ear
thqu
ake
Tur
key
Ear
thqu
ake
Ear
thqu
ake
18C
onfi
dent
ial
Exp
ecte
d e
arth
qu
ake
fata
litie
s in
Jap
an (
2007
) -
bas
ed o
n
anal
ysis
of
casu
alti
es b
y co
nst
ruct
ion
cla
ss &
dam
age
110100
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g F
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og
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alit
ies
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onfi
dent
ial
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gra
ph
ic C
om
par
iso
n o
f C
asu
alty
an
d P
rop
erty
L
oss
es
20C
onfi
dent
ial
Lo
cati
on
s o
f fu
ture
Hig
h F
atal
ity
Ear
thq
uak
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the
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alay
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ron
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21C
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dent
ial
Sce
nar
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ort
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Est
imat
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nat
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ide
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dent
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ula
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g <
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ain
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ain
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12121212
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Tsu
nam
iT
sun
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nam
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sun
ami
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ts m
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ts m
23C
onfi
dent
ial
In M
ajo
r C
atas
tro
ph
es -
Lo
ss d
oes
no
t o
ccu
r in
iso
lati
on
Sto
chas
tic
Sto
chas
tic
Vu
lner
abili
tyV
uln
erab
ility
Haz
ard
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ard
Fina
ncia
lFi
nanc
ial
Loss
Loss
90%
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oss
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oss
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imin
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laim
ing
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tal E
ven
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ota
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nt
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act
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no
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Co
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con
om
ic C
on
text
Po
litic
al C
on
text
Po
litic
al C
on
text
24C
onfi
dent
ial
Lo
ss a
mp
lific
atio
n:
resi
du
al a
dju
ster
co
sts
for
com
mer
cial
bu
ildin
gs
(fro
m X
acti
mat
e)
Resi
dual
Dem
and
Surg
e - C
omm
erci
al B
ldgs
95%
100%
105%
110%
115%
120%
125%
130%
135%
140% O
ct-0
3Ja
n-04
Apr-0
4Au
g-04
Nov-0
4Fe
b-05
May-
05Se
p-05
Dec-
05Ma
r-06
Normalized DS (by 1/1/2004)
Flor
idaGu
lf Are
aTe
xas
Miam
iBe
aum
ont
Galve
ston
Prin
cipa
l Hur
rican
esP
rinci
pal H
urric
anes
25C
onfi
dent
ial
Th
e ca
scad
e o
f co
nse
qu
ence
s: im
pac
ts a
nd
lo
sses
in ‘S
up
er-C
atas
tro
ph
es’
Con
tain
men
t Fai
lure
s
–F
lood
ing
from
failu
res
of d
ams,
leve
es, l
ands
lides
etc
–P
ipel
ine
& ta
nk b
reak
ages
–R
elea
ses
of to
xic
chem
ical
s/co
ntam
inan
ts
Long
-ter
m e
vacu
atio
n in
res
pons
e to
:
–B
reak
dow
n of
wat
er &
sew
erag
e sy
stem
s
–B
lock
ed a
cces
s –
(as
from
pro
long
ed fl
oodi
ng)
–C
onta
min
atio
n
Sys
tem
ic e
cono
mic
con
sequ
ence
s (im
pact
of t
he c
atas
trop
he o
n th
eec
onom
y fe
edin
g ba
ck in
to lo
sses
)
–ie
abse
nce
of la
bor
forc
e to
mak
e re
pairs
and
–ho
tels
/sto
res
choo
sing
to d
elay
ope
ning
thro
ugh
lack
of v
isito
rs
26C
onfi
dent
ial
Mo
st C
atas
tro
ph
e P
ron
e O
EC
D C
ou
ntr
ies:
ro
le o
f in
sura
nce
Cou
ntry
Per
ilsIn
sura
nce
Rol
e
Icel
and
EQ
, Flo
od, V
olca
noN
atio
nal U
nive
rsal
sch
eme
Italy
EQ
, Flo
od, V
olca
noV
ery
limite
d C
omm
erci
al in
sura
nce
Japa
n E
Q/V
olca
noP
artia
l EQ
insu
ranc
e
Flo
odG
ener
ally
una
vaila
ble
Mex
ico
Ear
thqu
ake
Lim
ited
Com
mer
cial
insu
ranc
e
New
Zea
land
Ear
thqu
ake/
Vol
cano
Nat
iona
l Uni
vers
al s
chem
e
Por
tuga
lW
inds
torm
Wid
espr
ead
Fire
Insu
ranc
e
Ear
thqu
ake
Lim
ited
Com
mer
cial
insu
ranc
e
Tur
key
Ear
thqu
ake/
Flo
odN
at S
chem
e (1
8% p
artic
ipat
ion)
>50%
>5
0%
2020-- 5
0%50
%55
-- 20%
20%
<5%
<5%
% o
f lo
ss c
ove
red
% o
f lo
ss c
ove
red
27C
onfi
dent
ial
Bey
on
d t
he
dir
ect
imp
acts
of
Cat
astr
op
hes
Pro
blem
s of
eva
cuat
ion
for
fore
cast
ed p
erils
–
All
evac
uatio
ns a
re o
nly
part
ial (
75%
in N
ew O
rlean
s 20
05)
–E
vacu
atio
ns m
ay b
e to
a lo
catio
n al
so in
per
il (a
s in
fire
fo
llow
ing
eart
hqua
ke a
nd in
eru
ptio
ns)
Long
term
dis
rupt
ion
––
Par
ticul
arly
a fe
atur
e of
vol
cani
c er
uptio
n –
Mon
tser
rat
volc
ano
cont
inue
s to
eru
pt a
fter
a de
cade
–
Man
y m
ajor
eru
ptio
ns le
ad to
long
term
reg
iona
l inc
reas
es in
flo
odin
gIn
abili
ty to
rai
se fu
nds
for
reco
nstr
uctio
n (p
robl
em o
f the
un
insu
red
and
for
deve
lopi
ng c
ount
ries)
–D
iver
sion
of f
unds
inte
nded
for
othe
r de
velo
pmen
t pro
ject
sIn
abili
ty to
pro
vide
lead
ersh
ip a
roun
d re
cons
truc
tion
–W
ithou
t a m
itiga
tion
stra
tegy
-kn
owle
dge
of r
aise
d le
vel o
f ris
k ca
n di
sinc
entiv
ize
imm
edia
te r
econ
stru
ctio
n -
exam
ple
of
New
Orle
ans
–‘T
he c
atas
trop
he s
erve
s to
acc
eler
ate
wha
teve
r ec
onom
ic
tren
d –
decl
ine
or r
isin
g pr
ospe
rity
–th
at e
xist
ed b
efor
e th
e ev
ent’
28C
onfi
dent
ial
Ris
ing
leve
ls o
f ri
sk a
nd
th
e re
trea
t o
f p
riva
te in
sura
nce
:
Bef
ore
risk
mod
elin
g, te
nden
cy to
ass
ume
that
cat
astr
ophe
ris
k co
sts
wer
e m
uch
mor
e un
iform
than
now
dem
onst
rate
d
–V
ery
high
ris
k gr
adie
nts
iden
tifie
d fo
r flo
od &
coa
stal
trop
ical
cycl
one
risk
–P
rivat
e in
sura
nce
syst
ems
tend
to c
ross
sub
sidi
ze th
ose
at
high
est r
isk
in a
way
that
may
not
be
sust
aina
ble
–S
tate
bac
ked
cata
stro
phe
insu
ranc
e sc
hem
es a
re o
ften
flat r
ated
–G
over
nmen
ts ‘s
hy’ a
bout
rev
ealin
g tr
ue d
iffer
entia
ted
risk
info
rmat
ion
as it
can
sig
nific
antly
affe
ct la
nd/p
rope
rty
valu
es
US
Gul
f and
Flo
rida
insu
ranc
e cr
isis
follo
win
g 20
04 &
200
5 H
urric
ane
seas
ons
–F
law
ed s
yste
m o
f priv
ate
win
d in
sura
nce
and
gove
rnm
ent f
lood
in
sura
nce
has
led
to m
any
law
suits
con
cern
ing
prop
ertie
s de
stro
yed
by h
urric
ane
stor
m s
urge
–N
ew J
an 2
007
Flo
rida
legi
slat
ure
sign
ifica
ntly
exp
ande
d go
vern
men
t rol
e in
insu
ranc
e an
d re
insu
ranc
e in
res
pons
e to
in
crea
ses
in in
sura
nce
cost
s (b
lam
ed o
n re
insu
rers
& m
odel
lers
)
29C
onfi
dent
ial
Hu
rric
ane
(win
d)
Ris
k co
sts
in F
lori
da
