Guy Carpenter seeks comfort on inland flooding

Guy Carpenter is actively engaged with a number of leading insurers in helping them understand the inland flooding peril, Sherry Thomas, managing director of cat management with the broker, told PCI Today.

While coastal flooding is better documented and understood, information on inland flooding can be scant.

But moves to privatise a peril that has ultimately been covered by the federal government for a long time has sparked a wave on interest from the insurance sector.

“Private insurers are asking what it would be like to take on private inland flood risk. There is a lot of curiosity out there and insurers are looking at it as a potential way to expand their premium base,” Thomas said.

“People are trying to see how they can become comfortable with the models that are available. We can help by providing model suitability analysis and turning clients into smarter risk takers.”

For the private market to cover inland flood, insurers must feel comfortable with insuring that peril.

“If you look at inland flood, it’s not been well studied and if you want large market participation then you need to provide raw data,” Thomas added.

She said the recently released GC AdvantagePoint, a portfolio and risk management platform, will help manage this peril. “It transforms massive amounts of data into actionable strategy,” said Thomas.

GC AdvantagePoint is designed to help insurance companies translate vast amounts of data to help leaders set strategy and improve underwriting profitability, understand risk concentration and make more informed risk selection and deliver real-time catastrophe tracking and improved claims management.

But for all the advancements in the platforms and models used by the industry, there are always perils that are not so well understood.

As to how far away the industry was in developing a model for cyber risk, Thomas said: “If the industry thought it was hard work building natural perils models, cyber represents a whole different ball game.

“I’m anxious for cyber models to become a mainstay in the business but this is an incredible task given all the complications of building a cyber model.”