Two major computer models that insurance companies -- and reinsurance
sellers -- rely on to predict hurricane losses are having trouble
passing muster with the state and have been pulled from review.

First, some background: The Florida Commission on Hurricane Loss
Methodology is the only public review of those computer programs,
anywhere in the nation, making its seal of approval the Holy Grail for
companies wanting to do business not only in Florida but before
regulators in other states.

This year there is intense interest in what the commission has to say
on two new models.

This is the first review of the public model created by Florida
International University at great taxpayer expense -- and for which
state regulators had relied to give a truth test to insurance company
rate filings. And it is the commission's first look at the controversial
model put out by RMS, which attempts to give five-year hurricane
forecasts instead of a 100-year outlook, a point of view that causes
hurricane loss risks to spike.

On Thursday, the commission canceled its public hearing of the RMS
model. The company was told after a site visit last month that it's
short-range model wouldn't pass muster. As a result, RMS says it has
decided to submit a revised version of the computer program that returns
to long-term forecasts. But not happily.

What's more, it is telling insurance companies they can have it both
ways -- to continue using the five-year program to do business, and the
100-year version when submitting rate filings to Florida regulators.

"On May 8, we communicated our disappointment to the Florida
Commission regarding the continued disconnect between the current
regulatory standards and science, and the resulting implications for
misunderstanding hurricane risk in Florida," vice president Mitch
Sattler says in a pres release.

"The long-term historical average significantly underestimates the
level of hurricane hazard along the U.S. coast, and there is a consensus
among expert hurricane researchers that we will continue to experience
elevated frequency for at least the next 10 years."

The FIU public model was supposed to be discussed today, but again,
the agenda was changed to indicate the university would be submitting a
new program for review.

The Florida Insurance Council states it was told by the commission that FIU also flunked its early site visit, and has asked for time to rewrite its code and come back for review.

Both models could get that second look in June, just after the start of hurricane season.