New tools should enable private sector to take US flood risk
A rise in sophisticated analytical tools in the past year has improved the prospects for private sector insurers and reinsurers to underwrite more flood risk in the US, according to Jane Toothill, flood mapping specialist at JBA Risk Management.
Toothill made the statement ahead of the annual catastrophe risk management conference organised by the Reinsurance Association of America (RAA) in Orlando, Florida.
The conference, being held from February 16-18, specifically includes a session on the possibilities of privatising flood risk in the US.
The RAA has argued that the US National Flood Insurance Program (NFIP) can address its volatility, extreme event exposure, and significant dependence on taxpayer-funded Federal debt through risk transfer to reinsurance and capital markets.
“As the US Government and insurance market consider how best to provide homeowners and businesses with flood insurance in the future, it is important that insurance companies can access the best quality data possible to assess and price risks accurately,” said Toothill.
“River and surface water flood are sizeable and often underestimated risks in the United States, as events in late 2015 showed.”
Increasingly sophisticated tools for re/insurers to manage US flood risks include a second generation of flood maps. JBA has released an upgraded set of multi-peril US flood maps which provide consistent 30m coverage across the whole country. The maps, which are updated annually to incorporate newly available data, are accompanied by a flood event set, a computer-generated catalogue of hundreds of thousands of possible flood events.
Toothill added: “The event set provides a detailed overview of the possible variety and scale of flood events that can impact the US, both hurricane-driven and non-hurricane. Insurers and reinsurers can use these maps and the event set for underwriting, pricing and catastrophe risk management.”
In October 2015, RAA President Frank Nutter has also said that opening the flood insurance market to competition would stimulate innovation and, over time, better protect those in harm’s way.
