Quantifying Flood Risk and Claims at the Property Level

February 1, 20160 Comments

Chris Chambers of Ordnance Survey at Ambiental’s Flood Re Business Breakfast for Insurers and Reinsurers

A barrage of storms hitting the UK in late 2015 has left thousands across Northern England reeling, with hundreds of millions of pounds worth of damage being caused to buildings and infrastructure.

Hurican_Kate_Nov_2015

In November, high rainfall from hurricane Kate followed hot on the heels of storm Abigail, swelling rivers, to a bank-full state. The arrival of storm Desmond less than two weeks later caused many to overtop, flooding more than 3,500 homes across Cumbria, and leaving tens of thousands across the border in Lancashire without power. Then, on Christmas Eve, storm Eva relentlessly deposited more than 120mm of rain onto the already saturated ground, resulting in the issue of almost 150 severe flood warnings throughout Northern England and into Scotland, Ireland and Wales. So serious was the threat of the storm that Prime Minister David Cameron chaired an emergency COBRA crisis meeting, and pledged military help to combat the unprecedented threat to homes across the UK.

With the increase in global temperatures bringing a warmer, wetter climate, the chances of flash flood events across the UK are only set to rise in the coming years. And so it is with great anticipation that the government regulated reinsurance scheme ‘Flood Re’ will launch later this year. The not-for-profit company, set up by the Association of British Insurers, will provide a pool of money available to insure homeowners who have been ceded by their insurance companies on the grounds of unacceptable flood risk. By ceding properties to Flood Re, insurers can protect themselves against heavy losses in the event of a flood, however stand to lose out on the premiums in the event that the property does not flood. For the insurance industry, deciding whether or not to cede a property to Flood Re can therefore be a minefield in its own right.

Speaking at Ambiental’s breakfast event last month, Chris Chambers, Senior Product Manager for Ordnance Survey, offered a solution to the gathered insurers. Since 1971, OS has been mapping Great Britain in its entirety, revealing the ever-changing landscape in extraordinary detail, and giving the most comprehensive view of Britain available. Their products help organisations across the country save time, money, and even lives, as well as aid in improving services, and making key business decisions. With 10,000 mapping updates available every day, the services of Ordnance Survey help generate £400 million in new revenue every year, and collect enough data to underpin £100 billion of the British economy.

How can Address level information help the insurance industry?

With such a vast array of data at their fingertips, OS offer a suite of services tailored to the insurance industry to help accurately estimate risk and minimise loss in the face of unforeseen events. This data is then utilised by Ambiental to deliver services such as FloodScoreTM, the property level flood-risk checking service, offering instant, high precision flood risk scores to all UK homes.

Speaking on what OS aimed to achieve at the Ambiental breakfast event, Chris said “We are hoping to demonstrate the benefits of address level geocoding, and address level risk analysis, so that insurers can more accurately determine the decision as to cede or not to cede a property, rather than leave it at post code level, which we find some insurance companies are.”

The thrust of his speech therefore was geared toward highlighting the huge value of address level data in analysing flood risk. “The main issues we are identifying,” he said, “is that insurance companies are finding it very hard to try and decide which properties to cede to Flood Re, and which not to cede. It is quite a difficult decision to make, and having detailed information at an address level gives a real advantage in making sure they cede the right properties.”

Chris hopes that by adopting OS’s ‘AddressBase’, insurers can move away from less accurate postcode level underwriting. With more than 40 million addresses in its system, AddressBase is the most consistent, accurate, and content rich source of geographic address data for the nation. By using precise address locations with a comprehensive summary of geographical features of that area, insurers can gain a deeper understanding of the true proportion of properties at risk of flooding in any given area. Prior to the availability of AddressBase data, the majority of underwriting occurred on a postcode level basis. This meant that if just one or two properties within a postcode were assessed as having a high risk of flooding, insurance companies would cede all properties within that postcode to minimise risk. A study of four separate areas showed that of 194,494 properties deemed to be at risk at the postcode level, just 6.6% remained at risk of flooding when using address level data.

As a partner of OS and through utilising the entire AddressBase database, Ambiental has been able to offer a unique, detailed view of flood risk to each addressable location in Great Britain. FloodScore™ currently covers 100% of GB properties, and provides property level precision to enable the power of the UPRN to be harnessed in underwriting systems. FloodScore™ coverage will also soon be extended to Northern Ireland and the surrounding Islands.

With the launch of Flood Re set for April 2016, insurers are being urged to prepare for the collection of the first levy, and ready themselves for business. To find out more about AddressBase, visit the OS website, or for more information on engaging with Flood Re prior to its launch, head over to www.floodre.co.uk.

For more information on how Ambiental utilises Ordnance Survey data to provide the insurance industry with ever more effective solutions to identifying and quantifying flood risk please call Mark Nunns on 0203 857 8545 or email mark.nunns@ambiental.co.uk.

Filed in: Latest News

About the Author ()

Sarah Gaunt is a freelance writer, and is responsible for producing blogs and news updates on behalf of Ambiental. With a background in natural sciences, Sarah has produced features and podcasts for a variety of press offices, and has published articles in several online and print magazines.

Leave a Reply

Back to Top