Flood models: Built with climate change in mind

Many of the data partners we work with here at SpatialKey are at the forefront of data science, and actively working to innovate modeling approaches to better understand the impact of climate change on flood risk. As carriers, brokers, and MGAs well know, models and their outputs are nuanced, and data providers have different views on climate change and modeling flood risk. That’s why it’s important to have multiple views of risk at your disposal, so you can identify the right models and model components that best represent your lines of business, geography, and business practices.

Come together, right now...and play nice with others

I’ve worked in the insurance industry for nearly 20 years, and I’ve (mostly) been pleased with how the industry collaborates, working together to solve problems and serve the global economy. As former Willis Re CEO, John Cavanagh, said in an interview with Insurance Thought Leadership, “Nothing flies, floats or gets built without insurance….Insurance plays a significant role in society and we need to protect that.” Indeed, the insurance industry is a small world that plays a big role in protecting society at large.

How is climate change impacting flood models?

Recently, Swiss Re announced that that the firm believes that 2017’s series of catastrophes occurring in the second half of the year is not a one-in-100 year event, but more like a one-in-10 year event:

"Climate change is in fact warming not just the Earth but also the oceans and one of the reasons why the expectation of future hurricanes is so high is that last years' three hurricanes together—the $135 billion of losses—are a one-in-10-year event not a one in a 100-year event….We see the possibility for a repetition of these kinds of losses in the foreseeable future." -John Dacey, Chief Financial Officer, Swiss Re

Dacey is not the only high-profile insurance executive to comment on climate change. Evan Greenberg, Chairman and CEO of Chubb, recently asked, “Given there have been three one-in-100-year floods in 18 months, how can Harvey represent a 1 percent chance of occurring as the models suggested?”

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