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Impact Forecasting Launches First Fully Probabilistic Catastrophe Model For Flood In The Netherlands

Tool will enable the Dutch market to assess the flood risk and consider expanding insurance cover.

Impact Forecasting, has launched the first probabilistic catastrophe model to understand the financial impact of flood damage in the Netherlands for property and motor. Aon Benfield is the global reinsurance intermediary and capital advisor of Aon plc (NYSE:AON).

Flood, along with wind, is one of the most prevalent natural perils in the Netherlands, having experienced notable floods in 1953, 1993 and 1995. Losses from flood have traditionally been largely covered by the government but the private insurance market is now considering how it could support Dutch people and businesses. This means a catastrophe model is crucial to understand the nature of the hazard and its loss potential to enable adequate premiums to be charged for insurance and in turn for insurers to purchase the most effective reinsurance.

The model innovatively allows insurers to explore and better understand the extent of the damage for different hazard conditions, including:

  • Three different assumptions concerning the probability of flooding per dyke ring – an area with its own hydrological characteristics enclosed by a flood dyke – ranging from optimistic (less frequent) to pessimistic (more frequent)
  • Ability to assess effects of different motor evacuation patterns.

A co-operation with HKV, a Dutch research consultancy, and Deltares, an institute for applied research in the field of water, subsurface and infrastructure, means the model’s hazard and vulnerability components are enhanced through local knowledge on how flood risk is analysed, modelled and managed in the country.

Radek Solnicky, flood catastrophe model developer, commented: “Our dedicated flood team has ensured the model reflects the nuances of flood in the Netherlands to provide the most accurate insights for the insurance industry. This includes drilling down to look at residential, commercial and industrial properties potentially at risk, in addition to agricultural land. For example, the model also allows a greater understanding about the resilience to flood of different buildings including more unusual properties such as greenhouses.”

Adam Podlaha, head of Impact Forecasting, added: “This model is a landmark in catastrophe model development in how insurers can quantify uncertainty of different aspects of the hazard component. The new model enables insurers to obtain a clearer picture of how the financial impacts change if we consider optimistic, realistic or pessimistic probabilities of flooding. This will empower our clients to demonstrate to various stakeholders that they really own and understand the risk.”

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Willis Re: Strategic Partnership With KatRisk and SpatialKey Delivers Unmatched Flood Analytics

Willis Re, the reinsurance arm of Willis Group Holdings plc, the global risk advisor, insurance and reinsurance broker (NYSE:WSH), KatRisk LLC, and SpatialKey Inc. have announced a strategic partnership to offer Willis Re clients unprecedented analytical capabilities to enable them to proactively manage flood accumulations.

The partnership will bring together a combination of Willis Re's in-depth insurance knowledge and analytical expertise, KatRisk's advanced science and industry-leading flood models, and SpatialKey's intuitive, speed-of-thought analytic platform. Willis Re will leverage KatRisk model data to produce risk intelligence delivered through its consultative analytics services and will provide direct client access via SpatialKey's Insurance Intelligence offering.

Vaughn Jensen, Executive Vice President of Catastrophe Management Services at Willis Re, commented "Market demand for a high quality and high resolution flood solution has never been greater. Insurers want to leverage the latest science and analytical methods to evaluate and manage flood exposure. Our partnership with KatRisk and SpatialKey offers the potential for significant improvement in how our clients proactively manage their flood accumulations."

Dr. Tim Fewtrell, Willis Flood Team Leader, added: "Building on R&D undertaken by Willis Re and Willis Research Network partners over the last two years, our team of highly qualified hydrologists at Willis Re has undertaken a thorough evaluation of the KatRisk product. We are confident that their approach represents the most accurate assessment of flood risk available to date."

Willis Re and SpatialKey are currently working together to integrate KatRisk's U.S. flood hazard maps into SpatialKey's forthcoming Flood Accumulation application. The SpatialKey Flood Accumulation app will offer users the ability to access, accumulate and visualize KatRisk's high-resolution data, which models both riverine and surface water flood risk.

Additionally, the KatRisk flood risk data can be analyzed alongside coastal surge data from National Oceanic and Atmospheric Administration, and compared to the Federal Emergency Management Agency flood zones and U.S. Geological Survey hydrological units, to help insurers build intuition and calibrate their views of risk.

Bret Stone, Vice President of Products at SpatialKey, said "This new analytical solution will be timely and relevant to the insurance industry. Willis Re's depth of insurance industry expertise along with KatRisk's excellence in modelling, are invaluable as we deliver tangible value to the market and catalyze a new way of managing flood exposures within the SpatialKey Flood Accumulation app."

While the initial focus of this collaboration is delivering a holistic solution for the U.S. market via SpatialKey, Willis Re Analytics can leverage KatRisk models to provide consultative services on a consistent global basis. Willis Re clients are now able to calibrate their underwriting and risk mitigation strategies with a clear view of risk and full understanding of key portfolio drivers.

Dag Lohmann, CEO and co-founder of KatRisk, commented "With Willis Re and SpatialKey, we are able to easily deliver compelling value from our flood models to the insurance industry. This is a big first step in providing insurers with the right intelligence, backed by the best available science, to quantify flood risk and monitor risk position over time."

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