Tag Archives: Flood

Our Flood Insurance System is Broken. Here’s How We Fix It.

Matthew Nielsen, senior director, governmental and regulatory affairs, RMS

Daniel Stander, managing director, RMS

This blog was first published in The Hill

Breezy Point, N.Y., Oct. 31, 2012 – Street scene after Hurricane Sandy. Source: FEMA

Katrina. Sandy. Matthew. We tend to remember the big-name storms that take over the news cycle for weeks, offering up poignant images of rescued families.

Yet many of us barely notice losses racked up annually from flooding events all over the U.S.: flash floods in the Midwest and Northeast, torrential rains in bone-dry Houston, dam spillways exploding in formerly drought-stricken California.

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What can you learn from Exposure?

Many RMS team members are active bloggers and speakers at speaking engagements, and contribute to articles, but to capture even more of our expertise and insight, and to reflect the breadth of our activities, we have created a new magazine called Exposure, which is ready for you to download.

The aim of Exposure magazine is to bring together topics of special interest to catastrophe and risk management professionals, and recognize the vast area that individuals involved in risk management must cover today.  There is also a theme that we believe unites the risk community, and that is the belief that “risk is opportunity,” and the articles within Exposure magazine reflect that this is a market seeking to avoid surprises, improve business performance, and innovate to create new opportunities for growth.

Within the foreword to Exposure, Hemant Shah, CEO of RMS, also reflects on an “inflection point” in the industry, a mix of globalization, changing market structures, to technology, data and analytics, offering a chance for the industry to innovate and increase its relevance.  In Exposure, there is a mix of articles examining perils and regions, industry issues, and articles discussing what’s coming up for our industry.

Within perils and regions, Exposure looks at opportunities for U.S. and European flood, the effect extra-tropical transitioning has on typhoons in Japan, and the impact that secondary hazards have, such as liquefaction, and the earthquake sequencing that hit the low-seismicity area of Canterbury, New Zealand in 2010 and 2011.

The magazine also tackles issues around Solvency II, the emergence of the “grey swan” event, why reinsurers are opting to buy or build their own insurance-linked securities fund management capabilities, and wraps up with Robert Muir-Wood, chief research officer for RMS, explaining how insurers can help drive the resilience analytics revolution.

Please download your copy now.

How U.S. inland flood became a “peak” peril

This article by Jeff Waters, meteorologist and product manager at RMS, first appeared in Carrier Management.

As the journey towards a private flood insurance market progresses, (re)insurers can learn a lot from the recent U.S. flood events to help develop profitable flood risk management strategies.

Flood is the most pervasive and frequent peril in the U.S. Yet, despite having the world’s highest non-life premium volume and one of the highest insurance penetration rates, a significant protection gap still exists in the U.S. for this peril.

It is well-known that U.S. flood risk is primarily driven by tropical cyclone-related events, with storm surge being the main cause. In the last decade alone, flooding from tropical cyclones have caused more than $40 billion (2015 USD) in insured losses and contributed to today’s massive $23 billion National Flood Insurance Program (NFIP) deficit: 13 out of the top 15 flood events, determined by total NFIP payouts, were related to storm surge-driven coastal flooding from tropical cyclones.

Inland flooding, however, should not be overlooked. It too can contribute to a material portion of overall U.S. flood risk, as seen recently in the Southern Gulf, South Carolina, and in West Virginia, two areas impacted by major loss-causing events. These catastrophes caused billions in economic and insured losses while demonstrating the widespread impact caused by precipitation-driven fluvial (riverine) or pluvial (surface water) flooding. It is these types of flooding events that should be accounted for and well understood by (re)insurers looking to enter the private flood insurance market.

It hasn’t just rained; it has poured

In the past 15 months the U.S. has suffered several record-breaking or significant rainfall-induced inland flood events ….

To read the article in full, please click here.

A Perennial Debate: Disaster Planning versus Disaster Response

In May we saw a historic first: the World Humanitarian Summit. Held in Istanbul, representatives of 177 states attended. One UN chief summarised its mission thus: “a once-in-a-generation opportunity to set in motion an ambitious and far-reaching agenda to change the way that we alleviate, and most importantly prevent, the suffering of the world’s most vulnerable people.”

And in that sentence we find one of the enduring tensions within the disaster field: between “prevention” and “alleviation.” Between on the one hand reducing disaster risk through resilience-building investments, and on the other reducing suffering and loss through emergency response.

But in a world of constrained political budgets, where should we concentrate our energies and resources: disaster risk reduction or disaster response?

How to Close the Resilience Gap

The Istanbul summit saw a new global network launched to engage business in crisis situations through “pre-positioning supplies, meeting humanitarian needs and providing resources, knowledge and expertise to disaster prevention.” It is, of course, prudent to have stockpiles of humanitarian supplies strategically placed.

But is the dialogue still too focused on response? Could we not have hoped to see a greater emphasis on driving the disaster-resilient behaviours and investments, which reduce the reliance on emergency response in the first place?

Politics & Priorities

“Cost-effectiveness” is a concept with which humanitarian aid and governmental agencies have struggled over many years. But when it comes to building resilience, it is in fact possible to cost-justify the best course of action. After all, the insurance industry, piqued by the dual surprise of Hurricane Andrew and then the Northridge earthquake, has been using stochastic models to quantify and reduce catastrophe risk since the mid-1990s.

Unfortunately risk/reward analyses are rarely straightforward in practice. This is less a failing of the models to accurately characterise complex phenomena, though that certainly is a challenge. It’s more a question of politics.

It is harder for any government to argue that spending scarce public funds on building resilience in advance of a possible disaster is money well spent. By contrast, when disaster strikes and human suffering is writ large across the media, then there is a pressing political imperative to intervene. As a result many agencies sadly allocate more funds to disaster response than to disaster prevention, even though the analytics mostly suggest the opposite would be more beneficial.

A New, Ambitious form of Public Private Partnership

But there are signs that across the different strata of government the mood is changing. The cities of San Francisco and Berkeley, for example, have begun to use catastrophe models to quantify the cost of inaction and thereby drive risk-reducing investments. For San Francisco the focus has been on protecting the city’s economic and social wealth from future sea level rise. In Berkeley, resilience models have been deployed to shore-up critical infrastructure against the threat of earthquakes.

In May, RMS held the first international workshop on how resilience analytics can be used to manage urban resilience. Attended by public officials from several continents the engagement in the topic was very high.

The role of resilience analytics to help design, implement, and measure resilience strategies was emphasized by Arnoldo Kramer, the first Chief Resilience Officer (CRO) of the largest city in the western hemisphere, Mexico City. The workshop discussion went further than just explaining how these models can be used to quantify the potential, risk-adjusted return on investment from resilience initiatives. The group stressed the role of resilience metrics in helping cities finance capital investments in new, protective infrastructure.

Stimulated by commitments under the Sendai Framework to work more closely with the private sector, lower income regions are also increasingly benefiting from such techniques – not just to inform disaster response, but also to finance the reduction of disaster risk in the first place. Indeed there are encouraging signs that these two different worlds are beginning to understand each other better. At the inaugural working group meeting of the Insurance Development Forum in Singapore last month there was a productive dialogue between the UN Development Programme and the risk transfer industry. It was clear that both sides wanted action, not just words.

Such initiatives can only serve to accelerate the incorporation of resilience analytics into existing disaster risk reduction programmes. This may be a once-in-a-generation opportunity to address the shameful gap between the economic costs of natural disasters and the fraction of those costs that are insured.

We cannot prevent natural disasters from happening. But neither can we continue to afford to spend billions of dollars picking up the pieces when they strike. I am hopeful that we will take this opportunity to bring resilience analytics into under-served societies, making them tougher, more resilient, so that when catastrophe strikes, the impact is lessened and societies can bounce back far more readily.

Using Insurance Claims Data to Drive Resilience

When disaster strikes for homeowners and businesses the insurance industry is a source of funds to pick up the pieces and carry on. In that way the industry provides an immediate benefit to society. But can insurers play an extended role in helping to reduce the risks for which they provide cover, to make society more resilient to the next disaster?

Insurers collect far more detailed and precise information on property damage than any other public sector or private organisation. Such claims data can provide deep insights into what determines damage – whether it’s the vulnerability of a particular building type or the fine scale structure of flood hazard.

While the data derived from claims experience helps insurers to price and manage their risk, it has not been possible to apply this data to reduce the potential for damage itself – but that is changing.

At a recent Organisation for Economic Co-operation and Development meeting in Paris on flood risk insurance we discussed new initiatives in Norway, France and Australia that harness and apply insurers’ claims experience to inform urban resilience strategies.

Norway Claims Data Improves Flood Risk

In Norway the costs of catastrophes are pooled across private insurance companies, making it the norm for insurers to share their claims data with the Natural Perils Pool. Norwegian insurers have collaborated to make the sharing process more efficient, agreeing a standardized approach in 2008 to address-level exposure and claims classifications covering all private, commercial and public buildings. Once the classifications were consistent it became clear that almost 70% of flood claims were driven by urban flooding from heavy rainfall.

Starting with a pilot of ten municipalities, including the capital Oslo, a group funded by the Norwegian finance and insurance sector took this address-level data to the city authorities to show exactly where losses were concentrated, so that the city engineer could identify and implement remedial actions: whether through larger storm drains or flood walls. As a result flood claims are being reduced.

French Observatory Applies Lessons Learned from Claims Data

Another example is from France, where natural catastrophe losses are refunded through the national ‘Cat Nat System’. Property insureds pay an extra 12% premium to be covered. All the claims data generated in this process now gets passed to the national Observatory of Natural Risks, set up after Storm Xynthia in 2010. This unit employs the data to perform forensic investigations to identify what can be learnt about the claims and then works with municipalities to see how to apply these lessons to reduce future losses. The French claims experience is not as comprehensive as in Norway because such data only gets collected when the state declares there has been a ‘Cat Nat event’  – which excludes some of the smaller and local losses that fail to reach the threshold of political attention.

Australian Insurers Forced Council to Act on Their Claims Data

In Australia sharing claims data with a city council was the result of a provocative action by insurers which were frustrated by the political pressure to offer universal flood insurance following the major floods in 2011.  Roma, a town in Queensland, had been inundated five times in six years – insurers mapped and published the addresses of the properties that had been repeatedly flooded and refused to renew the insurance cover unless action was taken. The insurers’ campaign achieved its goal, pressuring the local council to fund flood alleviation measures across the town.

These examples highlight how insurers can help cities identify where their investments will accomplish the most cost-effective risk reduction. All that’s needed is an appetite to find ways to process and deliver claims data in a format that provides the key insights that city bosses need, without compromising concerns around confidentiality or privacy.

This is another exciting application in the burgeoning new field of resilience analytics.

Euro 2016: France inundated by fans and floods

This week the final knockout rounds of Euro 2016 take place in France. Sadly, England has long since left the country and the tournament, largely due to some inept displays. But more miserable than England’s performance, was the weather at the start of the tournament, which caused concern in the capital as intense precipitation on top of an already saturated France, led to severe flooding.

Some areas of the country experienced the worst flooding they have seen in a century, with the floods across eastern and central France declared a natural disaster by French President François Hollande. River levels in the Seine were at their highest in nearly 35 years, impacting Paris, and leading to three of the capital’s best-known museums — the Louvre, the Grand Palais, and Orsay —closing their doors to the public, as staff moved priceless works of art to the safety of higher floors.

Source: The Guardian

There were also concerns surrounding how the flooding could impact the tournament. However, as you can see in the below image, which represents the RMS 1,000 year inland flood hazard extent, neither of the two stadia located in France’s capital (yellow markers) were really at any risk of flooding. The same can’t be said for the fan zone adjacent to the Eiffel Tower though (red marker). Continued intense rainfall, would have led to increased flood severity, meaning that 90,000 or so fans would have been in need of their waders.

Stade de France and Parc des Princes (yellow markers); Paris Fan Zone (red marker)

Paris wasn’t the only location in France to be impacted by the floods though; further south the town of Nemours observed severe flooding as the River Loing burst its banks. While devastating to the local community, this severity of flooding can be expected in the town. The RMS Europe Inland Flood maps demonstrate such flooding for events in excess of the 50 year return period, but as the below image of the 200 year flood extent demonstrates, the flooding could have been even more severe.

Rue de Paris, Nemours (yellow marker) and Château-Musée de Nemours (red marker)

The flooding in Nemours is a good example of why it is so important to understand the standard of protection offered by local flood defenses, in order to fully understand flood risk. The RMS Europe Inland Flood models and maps explicitly represent the impact of flood defenses and provide some noteworthy insights into the potential exposure at risk, if the standard of protection is not maintained or local flood defenses are overtopped.

Rue de Paris, Nemours. Source: The Guardian

If we removed all flood defenses and consider a 100 year return period level of flood hazard across France, the RMS analyses estimate that over €600 billion of insured exposure is at risk to flood damage. However, approximately 40 percent of this exposure at risk is protected against such levels of hazard by local flood defenses.

Source: Château-Musée de Nemours

And in the largest exposure concentrations, such as Paris and its surrounding area, the importance of local defenses is even more prominent. Looking at a similar 100 year return period level of flood hazard in this region, almost €60 billion of insured exposure would be at risk of flooding, but approximately 90 percent of that exposure is protected against this level of hazard.

Flood can be thought of as a polar peril; if you’re in the extent of a flood event, the costs are high but if you’re on the edge then you’re safe. And for this reason, an understanding of the impact of flood defenses is vital, because if they breach or become overtopped, the losses can be high. Knowing where exposure is protected allows you to write business smartly in higher risk zones. But understanding the hazard, should defenses fail, is also vital, enabling a more informed understanding of severe flood risk and its associated uncertainties.

This post was co-authored by Rachael Whitford and Adrian Mark.

Just How Unlucky Was Britain to Suffer Desmond, Eva, and Frank in a Single December?

Usually, it’s natural disasters occurring elsewhere in the world that make headlines in Britain, not the other way around. But you’d have to have been hiding under a rock to have missed the devastation wrought by flooding in the U.K. last month, thanks to the triple-whammy of storms Desmond, Eva, and Frank. Initial analysis from the Association of British Insurers suggests that the damage done could run to the region of £1.3bn.

But just how unlucky was the U.K.to suffer not just one, or two, but three big storms in one December, and for these three storms to interact in such a way as to produce the chaos that followed?

First it’s worth pointing out that floods in the U.K. are—as is usually the case elsewhere—subject to important seasonal variation (see chart below). The winter months bring the highest number of events, and December does in fact come out (slightly) on top, especially for flooding events of the sort seen last month, which tend to follow heavy rainfall leading to soil saturation (November 2015 received about twice the average climatological rainfall for November in the U.K.).

Source: RMS

The reason this matters is that, when soil is sodden following an extended period of heavy rains, further rains can more easily run off the surface, exacerbating the risk of pluvial flooding. The water will then follow natural and artificial drains until it reaches the closest river network, in which it can accumulate, potentially triggering river or “fluvial” flooding. The runaway effect of the masses of water can also cause what is known as ground-water flooding. This cumulative phenomenon means that—as we saw in December—flooding can persist for a significant amount of time, leading to several flood events in close succession.

A flood CAT model that properly captures these sorts of interactions between rainfall events and hydrological systems will allow not just for an assessment of the likelihood of a single severe event, but also a better understanding of the compounding factors that can lead to the sort of flooding seen in the U.K. last month. And based on our latest RMS pan-Europe flood model, the chances of having three rainstorms lead to major inland flooding over a single December are far from negligible.

Source: RMS Europe Flood Model

The chart above shows the probability of one, two, three, and four flood events for the month of December. What it means is that, on average, every second December in the U.K. has at least one flood event, and every third December has only one flood event. Around every eight years there are two flood events, and a cluster of three flood events happens once every quarter-century.

Now, this does not mean that flooding on the scale just witnessed happens on average every 25 years—just that this is the average period for seeing three flood events in one December. Even if it did, it wouldn’t mean that the U.K. can rest on its laurels until 2041… this is just a statistical average. It is quite possible for clusters to hit several years in a row—a so-called “flood-rich period”.

This gets to the real nub of the issue. The question of how often this sort of flooding takes place in the U.K. is almost by-the-by. The point is that it isn’t rare as hen’s teeth, and so the U.K. needs to be prepared. And what was most shocking about December wasn’t the flooding itself, so much as the sheer lack of resilience on display. A media storm has understandably been whipped up regarding the level of investment into flood walls and so on, but protective infrastructure is only part of the equation. What is needed is not just flood walls (which can actually be counterproductive on their own), but a wider culture of resilience. This includes things such as flood warning systems, regular evacuation drills, citizens having personal plans in place (such as being ready to move furniture to upper levels in the case of an alert) and, critically, the ability to respond and recover should the defences fail and the worst happen (which is always a possibility). The U.K. is the world’s sixth richest country—it has the resources to cope with flood events of this magnitude… whether they happen every five, ten or 25 years.

Can Flood Walls Reduce Resilience?

In early December 2015 Storm Desmond hit, bringing an “atmospheric river” to the northwest of England with its headwaters snaking back to the Caribbean. It broke the U.K.’s 24 hour rainfall record, with 341.1mm of rain recorded in Cumbria.

Just three weeks later, while a great anticyclone remained locked in place over central Europe and the atmospheric flows had only shifted south by 150km, Storm Eva arrived. The English counties of Lancashire and Yorkshire were drenched during December 26th, and the media was once more overwhelmed with flood scenes—streets of Victorian-era houses inundated by 30-40cm of slow-moving water.

Journalists soon turned their attention to the failure of flood protections in the affected regions. In one interview in Carlisle, a beleaguered Environment Agency representative commended their defenses for not having failed—even when they had been overtopped. If the defenses had failed, maybe the water would not have ponded for so long.

 The call for “resilience”?

The call has gone out worldwide for improved “resilience” against disasters. As outlined by the UN Secretary General’s Climate Resilience Initiative, resilience is defined as the ability to “Anticipate, Absorb and Reshape” or “A2R”.

How did the U.K.’s flood defenses match up to these criteria in December? Well, as for the two “A”s in A2R, the residents of Carlisle did not anticipate any danger, thanks to the £38 million spent on flood defenses since the last time Carlisle had a “1 in 200 year” flood in January 2005 (which hit 1,900 properties). And the only thing the houses of Carlisle were absorbing on the first weekend in December was the flood water seeping deep into their plaster, electricals, and furnishings. As for “reshaping”, beyond the political recriminations, now is the time for some serious thinking about what constitutes resilience in the face of floods.

A flood wall is not the same as resilience. Resilience is about the capacity to recover quickly from difficulties, to bounce back from adversity. Organizations such as the UK’s Environment Agency may be good at building flood defenses, but not so proficient at cultivating resilience.

A flood wall can certainly be part of a culture of resilience—but only when accompanied by regular evacuation drills, a flood warning system, and recognition that despite the flood wall, people still live in a flood zone. Because flood walls effectively remove the lesser more frequent floods, the small risk reminders go away.

A growing reliance on the protection provided by flood walls may even cause people to stop believing that they live in a flood plain at all, and think that the risk has gone to zero, whether this is in New Orleans, Central London or Carlisle.

Even when protected by a flood wall, residents of river flood plains should be incentivized, through grants and reduced insurance rates, to make their houses resistant to water: tiling walls and floors and raising electrical fittings. They should have plans in place—such as being ready to carry their furniture to an upper floor in the event of an alert—as one day, in all probability, their houses will flood.

Given the U.K.’s recent experience we should be asking are people becoming more resilient about their flood risks? It sometimes seems that the more we build flood walls, the less resilient we become.

Are (Re)insurers Really Able To Plan For That Rainy Day?

Many (re)insurers may be taken aback by the level of claims arising from floods in the French Riviera on October 3, 2015. The reason? A large proportion of the affected homes and businesses they insure in the area are nowhere near a river or floodplain, so many models failed to identify the possibility of their inundation by rainfall and flash floods.

Effective flood modeling must begin with precipitation (rain/snowfall), since river-gauge-based modeling of inland flood risk lacks the ability to cope with extreme peaks of precipitation intensity. Further, a credible flood model must incorporate risk factors as well as the hazard: the nature of the ground, such as its saturation level due to antecedent conditions, and the extent of flood defenses. Failing to provide such critical factor can cause risk to be dramatically miscalculated.

A not so sunny Côte d’Azur

This was clearly apparent to the RMS event reconnaissance team who visited the affected areas of southern France immediately after the floods.

“High-water marks for fluvial flooding from the rivers Brague and Riou de l’Argentiere were at levels over two meters, but flash floodwaters reached heights in excess of one meter in areas well away from the rivers and their floodplains,” reported the team.

This caused significant damage to many more ground-floor properties than would have been expected, including structural damage to foundations and scouring caused by fast-floating debris. Damage to vehicles parked in underground carparks was extensive, as many filled with rainwater. Vehicles struck by more than 0.5 meters of water were written off, all as a result of an event that was not modeled by many insurers.

The Nice floods show clearly how European flood modeling must be taken to a new level. It is essential that modelers capture the entire temporal precipitation process that leads to floods. Antecedent conditions—primarily the capacity of the soil to absorb water must be considered, since a little additional rainfall may trigger saturation, causing “saturation excess overland flow” (or runoff). This in turn can lead to losses such as those assessed by our event reconnaissance team in Nice.

Our modeling team believes that to achieve this new level of understanding, models must be based on continuous hydrological simulations, with a fine time-step discretization; the models must simulate the intensity of rainfall over time and place, at a high level of granularity. We’ve been able to see that models that are not based on continuous precipitation modeling could miss up to 50% of losses that would occur off flood plains, leading to serious underestimation of technical pricing for primary and reinsurance contracts.

What’s in a model?

When building a flood model, starting from precipitation is fundamental to the reproduction, and therefore the modeling, of realistic spatial correlation patterns between river basins, cities, and other areas of concentrated risks, which are driven by positive relationships between precipitation fields. Such modeling of rainfall may also identify the potential for damage from fluvial events.

But credible defenses must also be included in the model. The small, poorly defended river Brague burst its banks due to rainfall, demolishing small structures in the town of Biot. Only a rainfall-based model that considers established defenses can capture this type of damage.

Simulated precipitation forms the foundation of RMS inland flood models, which enables representation of both fluvial and pluvial flood risk. Since flood losses are often driven by events outside major river flood plains, such an approach, coupled with an advanced defense model, is the only way to garner a satisfactory view of risk. Visits by our event reconnaissance teams further allow RMS to integrate the latest flood data into models, for example as point validation for hazard and vulnerability.

Sluggish growth in European insurance markets presents a challenge for many (re)insurers. Broad underwriting of flood risk presents an opportunity, but demands appropriate modeling solutions. RMS flood products provide just that, by ensuring that the potential for significant loss is well understood, and managed appropriately.

South Carolina Floods: The Science Behind the Event and What It Means for the Industry

South Carolina recently experienced one of the most widespread and intense multi-day rain events in the history of the Southeast, leaving the industry with plenty to ponder.

Parts of the state received upwards of 27 inches (686 mm) of rain in just a four day period, breaking many all-time records, particularly near Charleston and Columbia (Figure 1). According to the National Oceanic and Atmospheric Administration, rainfall totals surpassed those for a 1000-year return period event (15-20 inches (381-508 cm)) for parts of the region. As a reminder, a 1000-year return period means there is a 1 in 1000 chance (0.1%) of this type of event occurring in any year, as opposed to once every thousand years.

Figure 1: Preliminary radar-derived rainfall totals (inches), September 29-October 4. Source: National Weather Service Capital Hill Weather Gang.

The meteorology behind the event

As Hurricane Joaquin tracked north through the Atlantic, remaining well offshore, a separate non-tropical low pressure system positioned itself over the Southeast U.S. and essentially remained there for several days. A ridge of high pressure to the north acted to initiate strong onshore windflow and helped keep the low-pressure system in place. During this time, it drew in a continuous plume of tropical moisture from the tropical Atlantic Ocean, causing a conveyor belt of torrential rains and flooding throughout the state, from the coast to the southern Appalachians.

Given the fact that Joaquin was in the area, the system funneled moist outflow from it as well, enhancing the onshore moisture profile and compounding its effects. It also didn’t help that the region had experienced significant rainfall just a few days prior, creating near-saturated soil conditions, and thus, minimal absorption options for the impending rains.

It’s important to note that this rain event would have taken place regardless of Hurricane Joaquin. The storm simply amplified the amount of moisture being pushed onshore, as well as the corresponding impacts. For a more detailed breakdown of the event, please check out this Washington Post article.

Notable impacts and what it means for the industry

Given the scope and magnitude of the impacts thus far, it will likely be one of the most damaging U.S. natural catastrophes of 2015. Ultimately, this could be one of the most significant inland flooding events in recent U.S. history.

This event will undoubtedly trigger residential and commercial flood policies throughout the state. However, South Carolina has just 200,000 National Flood Insurance Program (NFIP) policies in place, most of which are concentrated along the coast, meaning that much of the residential losses are unlikely to be covered by insurance.

Figure 2: Aerial footage of damage from South Carolina floods. Source: NPR, SCETV.

Where do we go from here?

Similar to how Tropical Storm Bill reiterated the importance of capturing risk from tropical cyclone-induced rainfall, there is a lot to take away from the South Carolina floods.

First, this event underscores the need to capture interactions between non-tropical and tropical systems when determining the frequency, severity, and correlation of extreme precipitation events. This  combined with high resolution terrain data, high resolution rainfall runoff models, and sufficient model runtimes will optimize the accuracy and quality of both coastal and inland flood solutions.

Next, nearly 20 dams have been breached or failed thus far, stressing the importance of developing both defended and undefended views of inland flood risk. Understanding where and to what extent a flood-retention system, such as a dam or levee, might fail is just as imperative as knowing the likelihood of it remaining intact. It also highlights the need to monitor antecedent conditions in order to properly assess the full risk profile of a potential flood event.

The high economic-to-insured loss ratio that is likely to result from this event only serves to stress the need for more involvement by private (re)insurers in the flood insurance market. NFIP reform combined with the availability of more advanced flood analytics may help bridge that gap, but only time will tell.

Lastly, although individual events cannot be directly attributed to climate change, these floods will certainly fuel discussions about the role it has in shaping similar catastrophic occurrences. Did climate change amplify the effects of the flooding? If so, to what extent? Will tail flood events become more frequent and/or more intense in the future due to a rising sea levels, warming sea surface temperatures, and a more rapid hydrologic cycle? How will flood risk evolve with coastal population growth and the development of more water impermeable surfaces?

This event may leave the industry with more questions than answers, but one stands out above the rest: Are you asking the right questions to keep your head above water?