The Risks of Hazard

Flood poses risk to property and productivity on every continent, and most developed countries have flood insurance available to mitigate that risk. However, everywhere you go, the flood insurance market is different.

There are four principle types of flood insurance models around the world, differentiated by who backs the insurance (government or private markets), and whether it’s bundled or separate from other property insurance coverage (e.g., flood and fire insurance are frequently bundled together).

Each style has its own pros and cons, and each exists in its region for a variety of reasons. Here is a quick look at the four types.

Modeling how a river will flood, or how the sea will rise over the shore, or how rain will accumulate and flood an area, is a tricky thing to do. The variables are limitless, and of course an act of nature is by definition unpredictable. Algorithms can get more and more complicated as these variables are accounted for in the model, but in the end it’s impossible to model things like trees accumulating under bridges to create ad hoc dams. What can really help a flood model’s quality is the foundation upon which it’s built: the empirical ingredients, like elevation data.

Way back at the beginning, we blogged about the different kinds of flood. Maybe we should have included winter flooding from ice floes. Granted, it is a variety of fluvial (or riverine) flooding, but there are some unique characteristics to this type of flooding.

Last week, we wrote about that NYT article that was the buzz of the flood community. As might have been expected, it created a little buzz. Below the line, an interesting conversation took place about flooding depths, BFEs, and how they relate to each other. There are a few thoughts in that commentary that are worth a deeper look this week. But first, a quick thank you to Christopher and Scott for their comments!

The New York Times continued the national coverage of flood insurance (see the WSJ last week) on the weekend with a long-form piece on The Woodlands. Their writers (John Schwartz, James Glanz, and Andrew Lehren) went deep on a family who bought their home in The Woodlands in 2011, with the reassurance from the builder that the house was definitely out of the “flood zone”.