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.