Development of a Hurricane Storm Surge Frequency Proxy for Athenium Analytics' Risk Management Tool

Recent devastating natural disasters have led to increased risk management practices by insurance companies. Insurance underwriters often rely on costly catastrophe models to understand natural hazard risk, particularly hurricanes. Athenium Analytics offers a market alternative to catastrophe models with the risk management tool, Gauge. Gauge provides comprehensive natural hazard risk scores built on decades of historical data. The risk scores incorporate frequency and severity components, and are available for several perils, including hurricane storm surge. Storm surge does not have a cohesive historical archive available, so direct, observation-based calculation of frequency is untrustworthy. The frequency component of the surge risk score is instead calculated using hurricane wind frequency as a proxy and applying weights based on two major influences behind storm surge severity: hurricane forward speed and approach angle. These weights provide better representation of storm surge frequency and risk by accounting for historic variations in hurricane characteristics along different sections of the United States coastline. Using this proxy for the frequency component benefits the quality of the Gauge storm surge risk scores and allows insurance underwriters’ to better assess storm surge risk.