BOSTON, November 7, 2011 — Catastrophe risk modeling firm AIR Worldwide (AIR) released an inland flood model for Germany that offers a fully probabilistic approach for determining the likelihood of flood losses from all types of storms. The model provides insurers and reinsurers with a robust tool for managing inland flood risk — allowing companies to make informed underwriting decisions, to monitor and quantify aggregate concentrations of flood risk across their portfolios, and to assess the potential impact of less frequent but large loss events.
“To meet the challenge of capturing both large-scale and small-scale precipitation patterns, AIR has adopted the innovative approach of coupling a state-of-the-art Global Climate Model (GCM) with a detailed Numerical Weather Prediction (NWP) model,” said Dr. Jayanta Guin, senior vice president of research and modeling at AIR Worldwide. “The result is a sophisticated model that simulates realistic and robust storm patterns over space and time, allowing companies to manage their risk from flooding both on and off the floodplain.”
The AIR Inland Flood Model for Germany includes on-floodplain flooding, which covers a river network extending more than 160,000 kilometers and comprising more than 30,000 stream links, and off-floodplain flooding, which is modeled according to the specifics of more than 35,000 small catchments (drainage areas) in Germany.
Flooding is a regular occurrence in Germany — and not limited to the coast or low-lying river valleys, but nearly ubiquitous due to off-floodplain flash flooding. With a significant percentage of losses from the 2002 floods occurring off-floodplain and much of that loss occurring in highly exposed urban areas, AIR has developed an explicit module for off-floodplain loss estimation. The off-floodplain model accounts for elevation, runoff, drainage backups, and facility aging at each modeled location.
Furthermore, the NWP model provides all the necessary input — liquid and frozen precipitation, surface wind, surface temperature, and solar radiation — to account for the impact of snowmelt and soil moisture conditions, both important contributors to flood risk.
Among the factors influencing the extent of property damage from flood are building characteristics such as construction material, building height, and basements. The model can also account for site-specific flood defense systems often deployed by large industrial facilities. Based on engineering analyses, findings from published research, damage surveys conducted by AIR, and insurance loss data, AIR engineers have developed flood-specific damage functions, or relationships between flood depth and the amount of damage caused to a given building/property, for 34 different construction classes and 50 occupancy classes in Germany.
Other highlights of the model include:
“Limited historical experience and company claims data are not sufficient to estimate potential losses from the most extreme events because the exposure continues to change in number, value, and location,” continued Dr. Guin. “The average annual insured loss today from inland floods in Germany is estimated around EUR 300 million, and this figure will only grow as more homes and businesses are constructed in flood-prone locations.”
The AIR Inland Flood Model for Germany is currently available in Version 13.0 of the CLASIC/2TM and CATRADER® catastrophe risk management systems.
About AIR Worldwide
AIR Worldwide (AIR) is the scientific leader and most respected provider of risk modeling software and consulting services. AIR founded the catastrophe modeling industry in 1987 and today models the risk from natural catastrophes and terrorism in more than 90 countries. More than 400 insurance, reinsurance, financial, corporate, and government clients rely on AIR software and services for catastrophe risk management, insurance-linked securities, detailed site-specific wind and seismic engineering analyses, agricultural risk management, and property replacement-cost valuation. AIR is a member of the Verisk Insurance Solutions group at Verisk Analytics (Nasdaq:VRSK) and is headquartered in Boston with additional offices in North America, Europe, and Asia. For more information, please visit www.air-worldwide.com.