24 May 2016 Insurance

Aon enhances catastrophe model in response to Poland floods

Impact Forecasting, Aon Benfield’s catastrophe model development team, has enhanced its catastrophe model to increase the understanding of the financial impact of floods in Poland.

According to the team, the model provides guidelines for rate calculation and risk zoning and helps with accumulation management and driving decisions on reinsurance purchase, all of which are Solvency II regulatory requirements.

The model includes locally sourced hydrological data for over 200 stations combined within a 2D flood model to identify areas susceptible to flooding. It has more than 60,000km of rivers, quadrupling the length of currently modelled rivers and more than 9,000km of levees, characterised by the location and height.

It has also designed 120,000 probabilistic events to represent flooding patterns during different seasons of the year.
Aon has said that floods have caused over two thirds of insured losses from natural catastrophes in Poland between 1997 and 2014, exceeding €700million.

It suggests that this frequent and costly flooding in recent decades, together with increasing insurance penetration and a need for a more sophisticated accumulation control, triggered the most significant update of Impact Forecasting’s probabilistic flood model for Poland since 2004.

Martin Salaj, model developer at Aon Benfield’s Impact Forecasting team, said: “The next generation of the flood model for Poland benefits from the ability of the Impact Forecasting team to couple the increased availability of detailed data and advances in hydraulic modelling on a country wide level.

“The two-year development resulted into a tool that enables our clients to achieve effective flood loss evaluation, optimise their underwriting processes and perform real time accumulation monitoring.”

Petra von Seydlitz, head of Aon Benfield’s Poland team, added: “Polish insurers can now access a state-of-the-art model which gives them the power to move beyond pure portfolio analysis. It reinforces Aon Benfield’s commitment to the Polish market.”

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