Aon Benfield Launches Canada Flood Model to Help Manage Exposures

May 18, 2015

Impact Forecasting, Aon Benfield’s catastrophe model development team, has developed a fully probabilistic flood model for Canada to help insurers and reinsurers better underwrite and manage their riverine and off-flood plain exposures.

The model was developed in response to devastating floods in Calgary and Toronto in the summer of 2013, which was the costliest year in the Canadian insurance industry’s history, said Aon Benfield, the global reinsurance intermediary and capital adviser of Aon plc.

In the wake of these unprecedented insured and economic losses, coupled with increased uncertainty regarding water damage coverage, managing flood risk became an urgent priority for the Canadian insurance industry, the company said.

The model offers a complete view of Canadian flood risk from providing underwriting data that drills down to individual locations while helping insurers to understand the impact of accumulations on their portfolios, to structuring reinsurance cover and fulfilling regulatory and rating agency requirements, Aon Benfield said in a statement.

The model is licensable and can be rolled out onto insurers’ desktops for easy access, said Aon Benfield.

The model comprises the following features:

  • Covers a geographical area representing 98 percent of the Canadian population.
  • Incorporates essential Canadian hazard content including local sources of spatial (GeoBase government initiative) and hydrological (Environment Canada and Le Centre d’expertise hydrique du Qu├ębec) data.
  • Combined hazard resolution of 10 meters for the most exposed areas and 30 meters for remaining parts of Canada.
  • Assesses the potential levels of damage based on loss data from Impact Forecasting’s seven other country-specific flood models and Canadian client claims information to reflect local characteristics.
  • Follows the latest scientific advances including 2-dimensional hydrodynamic modeling of all Canadian flood extents, advanced hydrological data processing and implementation of flood defenses.
  • Deployed in ELEMENTS, Impact Forecasting’s loss calculation platform, the model can be used for underwriting needs through its data or as part of a third party system.

Vaclav Rara, flood model developer at Impact Forecasting, commented: “The model is unique in its spatial scope, geographical resolution and state-of-the-art hydrological innovation resulting in enhanced loss accuracy estimates. It allows essential understanding and transparency through access to underlying data and to the developers in Impact Forecasting for ongoing support.”

David Sloan, president and CEO of Aon Benfield Canada, added: “While Southern Alberta and Toronto have diligently been rebuilding their communities following the staggering floods of 2013, our in-house catastrophe experts from across the globe have focused their efforts to develop a flood model for Canada from the ground up. Based on its release, I am thrilled that we are able to provide a high-quality tool that will hopefully transform how Canadian insurers underwrite and manage their flood risks both from a location level and aggregate accumulation perspective.”

Demonstrations of the new model will be featured at the inaugural Aon Benfield Canada Catastrophe Analytics Roadshow taking place in Montreal, Vancouver and Toronto in June, the company said.

Source: Aon plc

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