Summer flash floods forecast

For years, summertime flash floods been notoriously difficult to predict, hitting communities and insurers with hefty bills. Now a 3rd generation real-time, flood forecast is changing the way the industry responds to flooding.

Flash flooding in Edinburgh leaves motorists sitting on their car roofs. 580 homes are evacuated in Wainfleet, Lincolnshire after two months rain fell in two days and broke the river’s banks. These two headline grabbing stories occurred within a few days of each other and remind us how flooding can strike at any time, or in any place. During the summer months, volatile weather patterns cause storms which rapidly change by the hour, catching us off guard.

Cities across the globe are increasingly vulnerable to surface water flooding due to rapid urbanisation, infrastructure developments and more intense rainfall. According to the United Nations, flooding has affected over 2.3 billion people worldwide, resulting in 157,000 deaths, and approximately $90 billion annual economic losses, expected to reach $1 trillion by 2050. With a $40 billion gap in the USA insurance market, insurers and re-insurers are stepping up efforts to provide improved flood coverage.

Flood forecasting systems have been introduced to warn communities at risk of flooding, delivering exceptional returns of 400 to 1 by helping protect assets and improving event response. However, these forecasts do not cover surface water flooding, which the Environment Agency describes as the ‘biggest risk of all’.

This has led to a Loughborough University spin out, Previsico, commercialising surface water flooding research after 4 successful city pilots, undertaken in close collaboration with the Cabinet Office, Environment Agency and Met Office. The research has created a 3rd generation flood forecasting, FloodMap Live, that combines nowcasting with continuous modelling to predict surface water flooding at an individual property level. Tested globally it has demonstrated a high level of accuracy and its capability presents and exciting opportunity for insurers.

With high premiums and complex claims procedures, insurers are looking to new innovations to remain competitive. FloodMap Live is a novel technology that increases competitiveness by reducing losses and improving claims response to build an insurer’s marketing advantage.

The UK’s 2015/16 storms resulted in insurance losses of £1.3bn. Had insurers given their customers a reliable, specific advanced flood warning cars and other valuable assets could have been moved to safety. It is estimated losses could have reduced by 15%, saving the industry £195 million. Plus, customers would have benefited from saving valuable items and reducing the disruption to their lives or business.

Loss adjustment for large flood events is challenging and expensive with one insurer indicating costs at 20% of total losses. With property level flood forecasting an insurer’s claims response efficiency improves by targeting resources at the right properties. This produces both loss adjustment savings and increases customer satisfaction by quickly settling legitimate claims.

Insurers also need to correctly price in risk as a storm unfolds. Storm Desmond triggered a significant increase in new policy sales in and around Carlisle, but many insurers failed to price in the storm’s risk. Insurers can now avoid this risk by using a 3rd generation flood forecast to proactively price the flood risk as the storm unfolds.

As King Canute discovered we can’t hold the water back, but we can limit the loss to lives, livelihoods and property from flooding.

To learn more about Previsico’s FloodMap Live visit www.previsico.com