The lessons learned from record hurricane activity over the past two years has resulted in a flurry of improvements to modelling systems used by insurers, with the latest versions coming to market just in time for the start of the 2006 hurricane season.

Boston-based AIR Worldwide Corporation said on Tuesday that it had updated several of its catastrophe models, two days ahead of the official start to the Atlantic hurricane season yesterday.

Modelling firms, which supply systems to help underwriters assess the risk in contracts, are working around the clock to improve the capabilities of their systems, after last year?s record hurricane activity was far more devastating, and costly, than most models? projections.

Some of the models had estimated as little as $10 billion in total damage from a powerful hurricane swamping Gulf Coast city New Orleans, as Hurricane Katrina did last August 29.

After the embarrassing under-calculation, risk modelling firms are now increasing their storm-loss predictions (one event alone could now cost $100 billion, some modellers now calculate) and are bumping up the number of factors that can trigger losses in a catastrophe because Katrina proved there is a greater correlation between risks than previously thought.

Uday Virkud, AIR senior vice president, said revisions to its latest model include the ability to assess the probability and scope of US hurricane activity, Central and South American earthquakes, and Northern European storm activity.

And updates also account for the influence of current climate signals on hurricane activity this year.

Weather forecasters have been predicting above-average activity, including greater likelihood storms will move in to the North Atlantic, because of rising sea surface temperatures.

AIR said its US hurricane model was updated after ?extensive analysis by AIR scientists and engineers of post-disaster survey findings and detailed client claims data from the last two years?. And the models have been ?fine-tuned for a number of construction types including commercial wood frame and light metal?.

AIR also added more types of businesses to its modelling scenarios, including gas stations, restaurants and golf courses, to provide insurers who underwrite these types of policies with a more realistic view of their risk.

Risk Management Solutions, a rival of AIR beat its competitor to the punch, last week unveiling a new catastrophe risk model to reflect the higher frequency and severity of hurricanes. And this week the Newark, California-based firm rolled out a new model for insurers wanting to assess the risk of policies that could be exposed to European windstorms.

Another example of the increase in modelling options is Oakland, California firm Eqecat Inc.?s new gas and oil model, developed after Gulf Coast platforms were badly battered by Katrina and Rita. Of about 4,000 facilities in the area, three-quarters fell into the path of either or both storms, according to information from the US Department of the Interior.

While firms like AIR, RMS and Eqecat compete with each other, many insurers use systems from two or three of the modelling companies in order to enable their underwriters to have as much information as possible to make when setting the terms and conditions for a policy.

The latest RMS model, introduced to the market this week, marries numerical modelling abilities used to capture the intricate windfield structures of European windstorms, with statistical modelling, which is believed to be the best way to generate various scenarios based on historical records.

?We have redesigned every underlying component of the model to incorporate leading-edge statistical and numerical modelling techniques,? said Jorg Muller, vice-president of the RMS Central European practice. He said the changes provide underwriters with improved risk modelling capabilities to use when pricing policies.

Many insurers posted losses from European storms a year ago, although the hit was tiny in comparison to the $60 billion insurers have lost from last year?s hurricane activity.

RMS said they don?t have any scientific evidence to indicate European storm activity could be on the rise, including no sign that there is a correlation with the factors bearing on greater hurricane activity.