JBA Risk Management (JBA) is known as an authority on global flood risk so it’s no surprise that they’re constantly refining their flood data and flood maps. Since 2012 SpatialKey has partnered with JBA to help insurers better understand, select, and price flood risk accurately and with confidence. Recently, we caught up with Jane Toothill, Director of JBA, who sheds light on how improvements in their flood mapping are helping underwriters better assess and select this volatile risk.
Read on to learn about how JBA is taking on U.S. flood mapping (at 5m resolution), upcoming updates to their France flood maps, and what underwriters need to know about how climate change is impacting flood risk.
How is your data helping property underwriters?
We provide insurers with confidence to write and price flood risk, enabling them to grow their business in new regions and offer new products in areas in which risk was previously too poorly quantified to do so. For example, we provide:
- Consistent view of risk from country to country: Flood crosses geo-political boundaries, so a comprehensive and consistent approach is needed to enable insurers to develop a consistent view of risk from country to country. Our global flood maps are based on the same underlying methodologies, offering companies the opportunity to use a single consistent approach to flood risk management globally.
- Consistent view of flood risk across the risk transfer chain: Our maps and models provide a consistent view of flood risk across the risk transfer chain. This means that when an underwriter is placing a risk, they can be confident that the same underlying data is also part of the decision making in other areas of their business such as pricing, portfolio management, and capital management.
- Bespoke data: We can offer a tailored approach so that companies benefit from data bespoke to their exposure and business needs.
We have a great collaborative partnership that combines JBA’s scientific excellence with SpatialKey’s technological expertise to provide flood analytics that can be used by insurers on a daily basis. With our data integrated into SpatialKey’s underwriting solution, underwriters can quickly and intuitively interact with detailed flood extents, depth data, and risk scores to quickly qualify and quote new business with a more complete understanding of flood risk, while managing the impact of writing new risk on their existing book of business.
Is there an opportunity for insurers to close the protection gap?
2017 saw $27 billion in losses from flood events globally, of which only $2 billion was insured. The protection gap is one of the most pressing issues today, leading to a lack of societal resilience, particularly in many emerging countries where insurance penetration is negligible. Our global data provides companies with the opportunity to confidently underwrite and price risk in such areas, which offer business opportunities as markets open up.
Can you tell us about your U.S. flood maps, and the need for better flood mapping in the U.S. specifically?
The U.S. provides a real challenge with respect to flood mapping and modeling, not least because of the sheer size of the data generated. We are currently mapping the whole of the contiguous U.S. at 5m resolution and will explicitly model pluvial (surface water), fluvial (river), and storm surge flooding. In addition, we will provide hazard scores, representation of river defenses and Annual Damage Ratio data, enabling faster decision making at the point of underwriting for both risk selection and pricing.
"The National Flood Insurance Program (NFIP) has a significant impact on the residential market, with their Flood Insurance Rate Maps (FIRM) determining rates for many properties. However, the mapping provided is of variable quality and recent events have shown deficiencies in the FIRM mapping, which may be missing or tens of years old in some areas. Our data provides a consistent view of risk across the whole U.S., hence enabling underwriters to compare flood risk at distant locations with confidence that the same approach has been used at each." - Jane Toothill, Director, JBA Risk Management
How do updates to your France flood maps account for the extreme flooding that happened in Paris and surrounding areas earlier this year?
Our updated France flood maps provide comprehensive mapping of the flood extent that would result if flood defenses in Paris failed. This information is accompanied by data on the location, quality, standard of protection, and area benefiting from each defense. Thus, insurers are able to examine both the best and worst cases in terms of defense performance and make their own decision as to how much risk they wish to write behind any given defense or set of defenses. The updated maps will also better inform our event response service, enabling insurers to respond quickly and effectively to significant flood events. (Take a look back at 2015's French Riviera flooding.)
How do your France updates directly impact underwriters?
Flood water depths vary significantly over small spatial scales, for example between adjacent houses or across the extent of a commercial or industrial site. In order to fully understand flood risk at the property level, underwriters need access to complete and detailed information on this variation, without which, pricing of risks exposed to flood may be inaccurate. This can leave insurers exposed to unexpected large losses or cause them to quote unrealistically high prices.
Our update to 5m resolution data enables us to map surface water flood risk accurately, hence enabling underwriters to identify properties susceptible to ponding water—a risk that is often underestimated and can be missed by coarser resolution maps.
What makes mapping flood risk in France so complex?
We have to find ways to maximize the quality of the input data and efficiently deal with the vast quantities of data produced when mapping at high resolutions. We go to great lengths to ensure we are acquiring the highest quality elevation dataset, which is a key input to any flood map. This dataset is then edited to remove features which may act as obstacles to the flow of water. Technological advances in recent years have allowed us to migrate our European flood maps to 5m resolution starting with France. Our Italy flood maps will follow later this year, with Germany flood maps to follow thereafter.
How is climate change impacting your data for flood?
Climate change adds an extra element of uncertainty into flood maps and models. We also expect that it may cause the potential for flooding at properties not previously considered to be at risk, for example in areas affected by rising sea levels. The impact on precipitation patterns and the frequency and severity of extreme events is hard to estimate. The impacts of climate change will not be uniform across the world, or even within a country such as France—the impact is expected to vary from region to region.
How are you innovating your flood models to account for climate change and help underwriters better assess and select risk?
We are collaborating with world-leading academics and industry experts to provide insight into the changing risk associated with climate change-induced flooding. Our innovations:
- Help insurers assess the potential impact of climate change to their exposure at portfolio level for pricing and capital management purposes, for example via our new UK Flood Climate Change Model.
- Identify areas in which flood risk is expected to increase or decrease, so that underwriters may incorporate predicted changes into their underwriting strategy and grow or shrink their portfolio in these different areas accordingly.