By Bruce Mohl, The Boston Globe. April 2, 2006
The hurricane computer modeling company that kick-started the crisis with coastal home insurance three years ago -- and sent rates on Cape Cod and the islands soaring -- is back with more bad news.
Risk Management Solutions now says its earlier gloom and doom about the cost of potential hurricane damage in coastal areas was far too rosy. The California company is predicting that hurricanes will occur with much greater frequency and intensity over the next five years, and is telling insurers they need to increase their annual loss estimates by 25 percent to 30 percent in New England and the mid-Atlantic states, and 40 percent across the Gulf Coast, Florida, and Southeast.
The changes in Risk Management's computer model are expected to ripple throughout the home insurance industry, as the perceived higher hurricane risk translates into higher costs for insurers and higher premiums for owners of homes near the water.
''People don't understand it," said Senator Robert O'Leary, a Democrat from Barnstable who has fielded dozens of complaints from residents across the Cape and islands. ''It's just mind boggling."