Updated product deals with US offshore assets
AIR Worldwide has announced its US hurricane model for offshore assets. The company said the new probabilistic model will help insurers and reinsurers better manage hurricane risk to offshore platforms and rigs in the Gulf of Mexico.
“The AIR US Hurricane Model for Offshore Assets leverages the proven strengths of AIR’s US Hurricane Model, which has been the industry standard for assessing hurricane risk since it was introduced in 1987,” said Dr Paolo Bazzurro, director of engineering analysis at AIR Worldwide.
“The models share a single catalog of simulated events that enables companies to assess potential losses from individual hurricanes impacting onshore and offshore properties in the US, the Gulf of Mexico and the Caribbean.”
AIR said that one of the “unique features” of its model is that it explicitly models the physical damage and evaluates losses from wind and wave forces. “Physical damage to offshore platforms in the Gulf of Mexico is caused mainly by waves and wind; wind causes damage to the topside, namely to the deck plus equipment, and the waves cause damage primarily to the structure underneath the deck,” added Dr Bazzurro.
One of the challenges of modelling offshore exposures is lack of detailed exposure data for these high value facilities. A significant component of the AIR US Hurricane Model for Offshore Assets is AIR’s detailed database of the exposure at risk in the Gulf of Mexico. The database includes 13 types of platforms and rigs. In addition to the name, location, installation date and type of each platform and rig, AIR’s exposure database also contains critical information for assessing their vulnerability, such as the deck height, the number of legs and framing system, the number of wells in operation, the number of decks, and oil and gas production rates.
AIR’s exposure database includes nearly 6,000 platforms and rigs located in federal waters in the Gulf of Mexico, as well as structures in state waters off of Louisiana. Replacement costs — an essential input for accurate loss estimates — are included for each single platform and rig. The replacement value of the entire fleet in the Gulf of Mexico is approximately US$78bn.
The model supports policy terms common in the offshore market such as Complex Single Limits, Sublimits, and Assured Interest. Supported coverages include Physical Damage (PD), Business Interruption and Contingent Business Interruption (BI + CBI), Operator’s Extra Expense (OEE), and Debris Removal and/or Removal of Wreck (RoD and/or RoW).
“The AIR Model includes the most comprehensive database of platforms and rigs available in the industry and explicitly estimates losses for the most significant coverages in this market, which are responsible for the overwhelming majority of insured losses,” said to Dr Bazzurro. “Modelled loss estimates for all coverages have been extensively validated against approximately 50% of detailed claims data for Ivan, Katrina and Rita.”