Before the flood: Mapping an intensifying threat

As climate change transforms destructive floods into a primary peril, insurers and companies with valuable assets in harm's way need better tools to manage an intensifying hazard. Sophisticated US flood map data from Fathom, a new Swiss Re addition, have been integrated into our CatNet® risk assessment platform, marking a big leap forward in understanding this rapidly evolving peril.

In 2023, four massive floods in the United States caused more than USD 1 billion in damage each. From California to Florida to the US Northeast and East Coast, they struck in different seasons and geographies but were united by a common thread: their intensity defied expectations of many experts.

In addition to these big billion-dollar catastrophes, the US also endured numerous smaller but still destructive floods. Whether the source was surging high tides in coastal communities or relentless atmospheric rivers that overwhelmed municipal storm systems, outcomes were often similarly severe, destroying homes, disrupting businesses, and endangering lives.

Globally, flooding affects more people than any other natural peril. While floods have traditionally been considered secondary perils – the kind that happen relatively frequently but generate modest losses – climate change is super-charging their impact by making them larger, less predictable and costlier, more like primary perils such as Atlantic hurricanes or typhoons.

A major challenge in understanding and preparing for evolving flood threats has been that maps used to assess and quantify flood risk often haven't kept pace with a changing climate. One US government assessment concluded that flood hazard maps, for decades a key resource for communities to set building standards or determine flood insurance premiums for vulnerable properties, didn't reflect the best available climate science.

As one of the world's largest reinsurers, Swiss Re has long tracked natural catastrophe loss trends. While urbanization and accumulation of assets in exposed regions have historically been the main drivers of insured losses, our experts have determined that the changing climate will become an increasingly important factor in rising future losses.

With climate change contributing to intensifying hazards like extreme rainfall and powerful ocean storm surges that can cause bigger floods, powerful tools to understand these evolving risks are crucial.

We must get better at predicting what's to come, especially when a warming planet makes the past a less-reliable guide to future threats.

This month, Swiss Re Reinsurance Solutions, our division focused on delivering data-driven risk insights to clients, achieved a significant milestone in this pursuit when we integrated independently validated, high-resolution US flood map data into CatNet®. This is our risk assessment tool that insurers and companies can rely on to analyze their exposures to natural catastrophe risks.

This sophisticated US Flood Map was developed by our subsidiary Fathom, the UK-based water intelligence company that Swiss Re bought last year to supply clients with the highest quality dynamic flood risk assessments. Founded in 2012 by scientists at the UK's University of Bristol, Fathom already provides flood risk intelligence for numerous sectors across the globe, including helping climate-vulnerable countries future-proof themselves against disaster.

Complementing CatNet®'s existing hazard layers with Fathom's US Flood Map helps insurers and companies create more sophisticated climate-driven flood risk scenarios, instead of relying on historical data alone. The ability to view multiple flood-risk models on a single platform enables simultaneous comparisons, leading to more comprehensive risk assessments.

The hydrologists, climate scientists, software engineers, modelers, and GIS developers on Fathom's team have created the most complete digital terrain model of the US, with 10 meter resolution. Its hazard maps, aided by data gathered by satellites and on the ground, simulate the movement of water over the land's surface to pinpoint areas at risk.

Beyond visualizing flood risks more accurately, insurers can integrate Fathom data into their underwriting models to assess and price risk more confidently. Thus equipped, they can pinpoint and address exposures to vulnerable regions, adjust terms and conditions and exclusions to reflect evolving risks, and even identify promising geographical areas to pursue growth.

Fathom's US Flood Map can also help companies determine where their biggest risks will emerge, informing adaptation strategies aimed at avoiding losses today and tomorrow. By leveraging mapping technology, communities can better understand how and where to grow while protecting citizens and boosting the resilience of their economies.

The US suffers the largest annual economic losses from natural catastrophes of any nation. With climate change, it also faces increased exposure to rising weather-related losses like the floods of 2023. Just this January, for instance, San Diego County in California was declared a federal disaster area when rainfall eclipsed records, damaged hundreds of homes, and washed cars away.

Residents described being taken by surprise by what some called a 1,000-year storm, yet climate change means such events can no longer be considered anomalies. For this new reality, flood maps that keep pace with the forces of a warming world are an essential tool.