US Flood Risk Analysis

EQECAT's Consulting Services group provides flood risk analysis consulting services for the United States at the site and portfolio levels based upon the latest flood modeling methodologies for the country.

Flood Risk in the US

Flooding is a major risk to property in the US, responsible for more than one-third of all catastrophe losses in the last 50 years. Growing urbanization and development in the US are increasing the potential for significant flood losses:

  • The 1993 flooding along the Mississippi River caused reported losses in excess of $20 billion.
  • Slow-moving Hurricane Floyd (1999) caused over $6 billion in economic damages, but the US National Flood Insurance Program (NFIP) paid out less than $500 million in insurance claims.

The Federal Emergency Management Agency (FEMA) has developed Digital Flood Insurance Rate Maps (DFIRM) that provide a single point on the hazard curve for a location corresponding to the base flood elevation (BFE) for most of the US. These maps, however, do not:

  • Differentiate risk based on flood elevation or flood frequency above or below this single point;
  • Provide catastrophic risk scenarios necessary for insurers to manage their capital adequacy.

EQECAT's unique methodology generates a complete hazard curve for a location.

US Flood Modeling Approach

EQECAT's approach US flood modeling offers more than existing technologies to provide more accurate risk selection. The US Flood Model was built upon the digital flood modeling boundaries and incorporates:

  • River discharge data
  • Digital elevation maps to define flood plain extents
  • Hydrologic modeling to produce flood risk curves for all locations in the continental United States

US Flood Model vulnerability curves for property and business interruption, combined with floor elevation data, allow insurers to evaluate the risk attributes of individual locations and compare the relative risk of two different locations. EQECAT's US Flood Model facilitates a clearer understanding of flood risk to insurance underwriters and managers.

Residential Flood Damage in the United States

US Flood Risk Analysis

Consulting Services provides a full written report including methodology and assumptions used during the analysis. Upon request, we can also conduct an on-site meeting to discuss the technical underpinnings of our natural catastrophe models.

Clients can request the following US Flood Risk Analyses:
  • Site Level
  • Portfolio Level

Portfolio Risk Analysis for US Flood

EQECAT's Consulting Services group provides US Flood Portfolio Risk Analysis to quantify the impact of potential riverine flood losses on a portfolio. Analyses are conducted using our catastrophe risk modeling platform, RQE™, which includes 180 natural hazard software models for 96 countries spanning six continents. These models are based upon innovative applications of the latest science, engineering expertise, claims and exposure data and advanced mathematics.

Loss Metrics Included in the Analysis

The following loss metrics are included in the analysis:

  • Water depth at given site at specified return periods
  • Expected structural damage (%)
  • Ground-up loss ($)
  • Gross loss - less deductible ($)

Expected Annual Loss (EAL)

Expected Annual Loss is the "pure premium" or loss cost, which provides a measure of the long-term annual cost from flood losses.

Loss Exceedance Curve (LEC)

Loss Exceedance Curve is a probabilistic loss distribution, which provides loss estimates with their corresponding probability of being exceeded.

EQECAT works closely with clients to determine the appropriate level of site by site output required.

Analysis Report

The results of the analysis will be presented in a report that summarizes the loss estimates from the probabilistic and regional analyses to provide a clearer understanding of flood risk to insurance underwriters and managers. Statistics on the overall portfolio exposures and loss estimates will be provided. Results will be provided in tables, electronic output, graphs, and maps where appropriate. A preliminary report will be provided and reviewed with clients prior to issuing a final report to provide the highest level of satisfaction.

 

Learn more about how a US Flood Risk Analysis assists insurance underwriters and managers quantify the impact of potential riverine flood losses on a portfolio.