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Archive Stories
Archived stories from 2007

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Modellers announce new glue for balsa models

Cat modelling agency Models ?R? Us (MRU) has reacted angrily to accusations that its methodology is flawed. MRU made radical changes to the balsa wood scale models it uses to project property insurance losses following the hurricane seasons of 2004 and 2005, which produced record industry losses from a severe windstorms.

But regulators in Hazzard County have accused MRU of collaborating with insurers to help them ramp up insurance prices and protect their financial strength ratings.

Following the unprecedented storm losses caused by Hurricane Katrina, MRU decided to change the glue it used on its models. It has also released a stronger electric fan in order to allow users to more closely simulate a major hurricane. ?We decided that the hairdryer we have been supplying for the last 20 years wasn?t strong enough,? a spokesman for MRU told RISKbitz.

MRU has also tried to refine its windstorm forecasting techniques to project likely windstorm scenarios. ?We used to rely pretty much on observing a number of fir cones strategically placed on the chief executive?s desk,? the MRU spokesman said. ?Now we also use some seaweed hanging by the watercooler.?

But consumer groups and regulators say that the models? output is driven by insurance industry objectives and that the models are being used to justify massive rate hikes by reinsurers and their clients writing business in exposed regions.

?All we do is provide the balsa models at the very reasonable price of $500,000, we don?t tell the buyers how to interpret their output,? MRU said.


Other news from Jan 2007
 
Travelating the Wave of Insurability
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