Catastrophe Model Loss Calculator

Expected Annual Loss (EAL) is the average loss you'd expect per year if you could replay many years of catastrophe experience — it's a long-run average, appropriate for annual premium and reserve planning. Probable Maximum Loss (PML) is the loss expected at a specific rare-event severity, defined by Return Period — a 100-year PML is the loss level expected to be exceeded, on average, once every 100 years. PML is almost always far larger than EAL, since it represents a single severe tail event rather than an average across many mild-to-moderate years.

Probable Maximum Loss scales with the square root of Return Period relative to a 10-year baseline, so a longer return period (a rarer, more extreme event) produces a larger PML — a 500-year PML is meaningfully larger than a 100-year PML for the same portfolio. This approximates how real catastrophe models show loss severity growing with event rarity, though actual cat models use full simulated loss distributions rather than a single scaling formula.

Annual Exceedance Probability is the chance, in any given year, that a loss at or above the modeled Return Period's severity actually occurs — mathematically, it's 1 divided by Return Period, expressed as a percentage. A 1-in-100-year event has a 1% AEP: not a guarantee it happens once per century on a fixed schedule, but a 1% chance in any single year, the same way a '100-year flood' can occur in consecutive years by chance.

No. Reinstatement Premium — the cost of restoring reinsurance coverage after a loss depletes it — only feeds into Cat Load (%), which adds it to Expected Annual Loss as a share of Total Insured Value. It has no effect on the modeled Expected Annual Loss or Probable Maximum Loss figures themselves, which are driven purely by Total Insured Value, Area Hazard Level, Return Period, and Deductible %.