The Risks of Hazard

The National Research Council (NRC) published a report in June that explored how FEMA’s National Flood Insurance Program (NFIP) appraises flood insurance in the U.S. It is a very thorough and technical document (as one would expect), that reaches ten conclusions on how NFIP can improve its pricing strategies to become, essentially, more solvent. The conclusions focus on different aspects of how a policy price is determined, including the use of loss/claims data, the risk analysis, flood modeling techniques, damage and exposure estimations, replacement costs, and other factors. One conclusion stood out for me, and I wasn’t alone.

Today is a big day for Intermap and for InsitePro — we are releasing FloodScope™ USA, the only flood model available that is built on a contiguous, manually-edited digital terrain model (DTM) for the lower 48 states and Hawaii.

As I've discussed before, elevation data is a key input into any flood model, so the ability to leverage a high quality DTM at full resolution is a significant achievement. Starting today, insurers can use flood zone determinations as a part of their analytics to better understand the risk of river flooding.

Two weeks ago, I wrote a post that explored the May 2015 Houston floods and suggested some lessons that might be offered by the events. This topic attracted a large audience and generated a lot of questions and discussion. In my conclusion, I suggested that carriers might consider creating a flood analytic specifically for this city.

With Tropical Storm Bill currently bearing down on Texas, today I will take a closer look at how a carrier or underwriting group could use Intermap's risk assessment software, InsitePro, to build a new analytic to handle "Houston Flood" as a distinctive peril.

The tragic flooding in Houston over the past few weeks has been well covered by the global media, as one would expect when the 4^th largest city in the United States is submerged under water. Property insurers are obviously concentrating on claims right now, helping their customers through this traumatic time and getting them ready to rebuild their lives. But as the facts and statistics begin to emerge, it is also interesting and instructive to explore how the risk of events like this can be adequately understood for underwriting and accumulation control by insurers.

As you may recall, a few weeks ago I mentioned I was planning a trip to Asia to try and find out how insurers, brokers, and reinsurers are handling their risk assessment, particularly for flood risk.

As I sit on the flight from Hong Kong to San Francisco, I have the memories from my 10-day Asia Risk Tour still fresh in my mind. Foremost are the warm welcomes we received everywhere we went, with immaculate hospitality from all our hosts. The food is also still vivid in my mind, from the Under Bridge Spicy Crab in Hong Kong to the famous street food stalls of Singapore, filled with sate and spicy seafood. Coffees and cocktails were enjoyed both under the ground and hundreds of feet in the sky.

I also learned a lot about how the insurance market in Asia manages location-specific risks, especially from natural catastrophes (nat cat), which of course is what I was there to do.