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You are here: Home » News » A “Wind PML” Standard on the Way?

April 5, 2017

A “Wind PML” Standard on the Way?

By Partner ESI

Efforts are renewing to establish an ASTM standard for assessing windstorm losses for commercial real estate. Partner’s own Jane Powell, PE will chair the ASTM committee which is currently forming to establish a standard for “Wind PMLs” or “Wind Probable Maximum Loss” assessments.

The time is ripe for such a standard. Over the last decade, hurricane-loss models have shown increased expected windstorm losses resulting in higher insurance premiums for properties located in hurricane damage-prone areas. Of the top 30 costliest hurricanes during the period from 1851 to 2004, about half of these have occurred since 1995. As a result, lenders and investors are turning to Wind PMLs to help predict loss due to hurricane windstorm events and inform their risk management decisions.

Wind PMLs are not a new concept. Hurricanes Katrina and Rita were the genesis for the first attempts to create an ASTM Wind PML standard, though those efforts stalled. There are many technologies available today to assist in the modeling and analysis process; however, there has never been an industry-standard methodology for assessing windstorm risk, or for the qualifications of the professionals completing the assessment. The renewed ASTM committee’s efforts will aim to correct that.

The term “Wind PML” is a working title for this standard as the committee will also be evaluating whether the standard should broaden to evaluate other hurricane-related risks such as flooding. One thing is clear at this point —the standard will cover only hurricane-related risks, not risks from tornados or straight-line winds.

Get Involved

The process is in the early stages and will take many months before a final Wind PML standard is presented to the commercial real estate industry. The ASTM committee is seeking input from end-users to discuss their needs and how these assessments can help them lend or invest. Please reach out to Jane Powell if you would like to weigh in.

Check back to our News page for more updates as the process unfolds!

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