RMS is forced to defend its methodology for “near term” hurricane models after criticism from consumer groups...

Risk Management Solutions (RMS) has been forced to defend its methodology for “near term” hurricane models after critical comments from consumer activist groups, according to Insurance Journal.

Robert Hunter, director of insurance for the Consumer Federation of America, Birny Birnbaum, executive director of Center for Economic Justice had previously written to state regulators and the National Association of Insurance Commissioners (NAIC) accusing RMS of collusion with insurers.

"RMS has become a vehicle for collusive pricing," Hunter charged. "The huge increase in rates that ultimately occurred because of inaction by NAIC and several states was due to pressure from insurers."

However RMS's public policy department was quick to refute the claims. "Our model reflects the widespread agreement among researchers that hurricane activity in the North Atlantic has increased since 1995 and that this period of elevated activity will last for at least another 10 years," said Mitch Statler, vice president of public policy at RMS. "The long-term historical average significantly underestimates the hazard posed by hurricanes for the foreseeable future."

"The objective risk metrics provided by RMS models are based entirely on science and are in no way driven by any collusive practices or pressure to produce results that appear to be favorable to the insurance industry," Statler said.