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KCC White Paper - The 100 Year Hurricane

May 30, 2014

Frequency does not drive hurricane losses. Eighty percent of average annual losses are driven by the top 20 percent of hurricanes. Average annual hurricane losses are dominated by years when a major storm strikes a populated area. This can happen in any hurricane season.

This white paper shows how a new risk metric–the 100 year Characteristic Event (CE)–can be used to scientifically identify and manage exposure concentrations in order to reduce the chances of surprise losses. The CEs address a company's "informal" risk tolerance by highlighting where a company can have a larger loss, and perhaps just as importantly, a larger share of the market loss than expected.