Cat Models have no Security for Insurance Companies

Japan's sunami was higher than the Cat modelers ever expected. The waves went over the sea wall like it was nothing. The insurance Cat models didn't see it coming. The catastrophe in Japan is showing insurance company execs that the Cat models that they buy into may not be the security blanket they hoped for. As a matter of fact the inventor of Cat models, Karen Clark, is now telling insurance company bosses not to depend so much on the accuracy of the models. Mother nature is still in charge and insurance companies will have to plan on paying out Cat's. The ability to predict accurately, charge appropriately, and underwrite effectively using Cat models is turning out to be precarious and maybe out of reach. Why? well as mother nature is showing us, the imaginable still happens in our world. until next time be careful out there and know your risks. K

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