Louisiana Insurance Commissioner Jim Donelon has told insurers to stop using a controversial hurricane loss-projection model until it is certified by a Florida certification unit.
At issue is a model developed by Risk Management Solutions Inc., which was criticized last month by two consumer groups as "severely flawed."
Instead of using 100 years of data, the model–RMS 6.0–uses rolling five-year periods. That near-term model, according to the Washington-based Consumer Federation of America (CFA) and the Center for Economic Justice (CEJ) in Austin, Texas, has led to rate increases of 25 percent in Maine, and 50 percent or more along the Gulf Coast.
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