In yesterday’s post, I talked about efforts by insurance companies to justify their rate increases by changing at least one computer model used to project losses:
The primary computer model used to justify rate increases is flawed based on faulty science. The model, used by more than 400 insurance companies, was previously based on 100 years worth of storm data. It was changed to use just five years of storm data. This change caused the projected losses to increase by 40% over the old model. Apparently, the change was requested at the behest of the insurance industry. (Tampa Tribune Article)
Today, the Tampa Tribune has done a follow-up story on the issue, noting the House Speaker Marco Rubio (R-Miami) has asked all of the companies that provide hurricane-loss models to submit not only their models, but also the assumptions used to create the model:
The speaker of Florida’s House is demanding that companies across the country hand over computer models used to justify huge homeowners insurance rate increases in many coastal areas.
That could lead to a precedent-setting battle over information the industry has long considered confidential.
“We’re going to ask them to produce that model, and I hope they’ll comply, and if they don’t, we reserve the right to avail ourselves of our subpoena power,” Speaker Marco Rubio said Tuesday. “I’m not sure how they’ll react to that, but we think it’s important.”
Rubio’s letter demanded not only the software for the models but also “the assumptions and factors used in developing the models, including any proprietary information.”
It will be interesting to see how this plays out over the next week.