Flood risk: chasing away an unwanted houseguest
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Flooding affects one-third of the global population, more than any other natural hazard, yet sophisticated prediction and prevention strategies have emerged only in the last decade.
Clearly, there's a need for advanced modeling, as 2024 was the third costliest year for flood on record - driven by extreme weather and economic growth.
In our webinar, "Flood in focus: Underwriting with confidence," we shared how Swiss Re is reshaping the approach to assessing flood risk by offering numerous views of flood hazards on a single platform through CatNet®, our proprietary location intelligence tool. CatNet® features a wealth of data points for flood, including official flood zone maps for selected countries and Swiss Re's Global Flood zones, as well as high-resolution flood hazard data and maps from our subsidiary Fathom. This enables clients to receive multiple perspectives on their flood risk, helping them build a comprehensive view of their portfolio.
Becoming a risk-assessment expert with CatNet®
With global high-resolution hazard maps at its core, CatNet® offers a wide range of capabilities to help insurers better assess their exposure to natural catastrophes, including floods, providing seamless support across the entire insurance value chain. Fathom's award-winning flood data aligns with CatNet®'s reputation as a one-stop tool for globally consistent, high-resolution NatCat data. These maps incorporate the latest science to identify regions at high risk for fluvial, pluvial and/or coastal flooding.
How CatNet® offers a comprehensive flood risk view with Fathom data
The integration of Fathom maps in CatNet® opens the door to additional high-resolution, accurate flood risk datasets and extra return periods along with the information available in Swiss Re Global Flood Zone maps, resulting in a more comprehensive view of one of the world's most prevalent natural hazards. Fathom data enhances decision-making further by introducing flood depths for each return period. Fathom also generates Risk Scores which consolidate vast amounts of data in a globally consistent, relative measure of flood risk potential, enabling a simple but comprehensive comparison across different locations.
CatNet® also offers First Floor Height (FFH), a key metric that makes a big difference. Without insight into FFH, it’s difficult to know the true flood risk. For example, if Fathom flood depth is 0.6 meters at a 100-year return period and the FFH is 1.2 meters, the flood risk is very different than if the FFH is 0.2 meters.
Benefits of consuming Fathom's data within a mapping tool like CatNet®
All of this valuable data becomes even more useful when consumed through a mapping tool like CatNet®. For example, when analyzing hazards based solely on one latitude/longitude, insurers may underestimate the overall risk. CatNet®'s geospatial capabilites help identify risks that might have gone unnoticed. Features like moving the geocoded pin to an easily identified, higher-risk pixel within the site allows for a more conservative risk assessment.
A tale of two cities – risk assessment in action
Using a randomly generated portfolio, we demonstrated the results available to insurers via Fathom flood data in CatNet® and how their use improved risk-assessment.
The availability of fluvial, pluvial and coastal flood risk views and flood depths at eight return periods differentiates CatNet® with Fathom flood maps from other mapping tools. Users can also examine the undefended view for a more conservative estimate and compare it to a defended view to quantify the effectiveness of flood defenses and gather insights on scenarios where defenses fail.
Accounting for defenses moved many properties out of the "at-risk" category altogether, as demonstrated in our webinar. Moreover, the analysis reveals a noticeable decrease in modelled flood depths for the "at-risk" locations. Fathom flood maps within CatNet® help identify potential losses, improving an insurer's understanding of what's on their books and how they can prepare accordingly.
Summarizing hazard information for simpler comparisons
For insurers who want an even simpler way to compare risk across their portfolio, Fathom's Risk Scores consolidate available information into a single metric for fast, easy and consistent comparison of different locations. The platform offers these Risk Scores in two formats: Relative Risk and Category Score.
Relative Risk calculates the Risk Score using modelled flood frequency, severity and defense breach probabilities, while Category Score categorizes this metric and adds a model uncertainty element.
In the webinar, we compared the Risk Scores of two different locations in Germany that are both located in high-frequency flood zones, with flooding modelled at least once every 10 years. At a glance, the two locations seem to present similar flood risk, but when considering the difference in flood depth across return periods and impact of flood defenses, the risk profiles differ dramatically. For example, accounting for defenses significantly lowers modelled flood frequency and severity for Location 2, but less so for Location 1. Fathom's Risk Scores consolidate all the available hazard information at each grid cell; the Risk Scores for Location 1 are much higher than the Risk Scores for Location 2.
Take the next step toward managing flood risk
Access to high-resolution, accurate, high-fidelity datasets that cover the entire planet is a concept that’s long overdue. With more people living in areas vulnerable to flooding, it's vitally important for insurers to leverage high-quality data to routinely make better decisions and protect their customers.
Show flood risk the door – watch the webinar to learn how: Flood in focus: Underwriting with confidence - On-demand webinar | Swiss Re.
