Munich Re: climate change is increasing flood risk

US flood risk is an increasingly important and also complex issue for the US market, according to Raghuveer Vinukollu, senior vice president and natural catastrophes lead for innovation and strategic products at Munich Re America.

Vinukollu said that ever since the hurricanes of 2016/17, which also caused heavy flooding, the market has been increasingly attuned to the fact that flood losses can be caused by wind events and they are often poorly understood.

A recent example of this challenge was illustrated by tropical storm Barry, which caused flash floods in Louisiana in July.

“2019 was a unique year; the floods on the Mississippi River were almost the third longest duration ever, after the floods of 1927, 1992 and 2011. Some locations in Louisiana were at a flood stage for more than 250 days,” Vinukollu explained.

“There was a combination of the river flowing at a high peak level continuously for more than six months, and then a hurricane from the south those were unprecedented conditions, we haven’t seen that in recorded history. But that’s the new norm.”
Vinukollu said that global climate change was also increasing the amount of water in the atmosphere. Data from the US government’s disaster control agency FEMA show that over the past decade 98 percent of counties in the US had seen floods.

“The 98 percent is such a high number it shows the seriousness of the peril,” Vinukollu warned.

Vinukollu pointed out that many catastrophe models were created only after Hurricane Andrew in 1992 as re/insurers sought a better understanding of this risk. In contrast, flood models are a lot more recent.

He added that take-up of flood insurance remains low in the US, although 2019 has been more positive. The more flood insurance solutions out there, the more the US public might be encouraged to get coverage, he said.