UK-based JBA Risk Management, a global provider of flood modelling services for insurers, reinsurers, and property or asset managers, announced the release of its “high resolution, multi-peril flood model of the UK to assist the insurance industry place household risks with the new reinsurance facility, Flood Re.
JBA described the probabilistic flood model as “an essential stage in the process of creating affordable domestic flood cover for homes in high-risk areas.” JBA developed the model in collaboration with Guy Carpenter, the reinsurance broker to Flood Re, which is scheduled to “go live” in the first half of 2016. It described the flood model as “unique in that it includes river, rain and surface water (pluvial), and coastal flooding for the whole of Great Britain and Northern Ireland.”
JBA Risk Management’s director Jane Toothill explained: “The model allows insurers to better understand which risks should be ceded into Flood Re and reinsurers to quantify the risk associated with the Flood Re portfolio.
“The model will also be available to insurers and reinsurers who wish to fully quantify and understand their risk due to flooding in the UK. Although Flood Re will only be reinsuring domestic property, the model is comprehensive. It also includes commercial and industrial buildings.”
Vic Jenkins, managing director, head of technical innovation EMEA for Guy Carpenter, noted: “The completion of the JBA UK Flood model for the first time provides access to a truly holistic modelled view of flood risk from all perils and for the entirety of the UK. As insurers are refining their Flood Re cession strategies, this provides additional insight to aid understanding and provide more clarity to that ‘to cede or not to cede’ decision making process.”
JBA pointed out that it is “crucial to explicitly model rain and surface water (pluvial) perils in addition to river and coastal flooding, due to their significant contribution to losses. For example, the torrential rainfall which overwhelmed drainage systems was responsible for a considerable proportion of the disastrous summer 2007 floods. They resulted in £3 billion [$4.476 billion] in insurance claims across the country.
“Over the past five years since 2010, there have been more wet records than in any other decade. This includes the winter of 2013/14: the wettest on record.
“November 2015 was rainy, dull and warm with temperatures averaging 2 degrees higher than the 1981-2010 long-term average. Since the start of December, there have been floods and still more floods, with two Christmas shopping weekends rained out for many. A gauge at Honister Pass recorded 341.4mm [over 13 inches] of rainfall in the 24-hours up to 1800 GMT on 5 December 2015, making for a new UK record for any 24-hour period. A new 48-hour record was also set, when 405mm [15.8 inches] was recorded at Thirlmere in Cumbria in just 38 hrs., all according to Met Office figures.
The bulletin also described some of the technical specifics used in developing the flood model. It said the model “required both the creation of a multi-peril stochastic flood event set, and the incorporation of 5 meter [16.4 feet] resolution hazard mapping for all three perils. The event set contains hundreds of thousands of plausible flood scenarios grouped into years. Each event can be made up of elements of one, two or three perils.
“Flood hazard maps created by JBA are already used by over 80% of the UK insurance market for underwriting purposes. The model, therefore, offers a unique opportunity to assess accumulated UK flood risk on a platform consistent with today’s underwriting practice.”
Source: JBA Risk Management
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