“One of the least-insured perils,” is how risk management and technology firm Milliman describes flooding, given the complexity and unpredictability of the risk. But is the insurance industry missing out?
AIR Worldwide’s €1.1 billion to €1.9 billion (around £918 million to £1.6 billion) insured loss estimate for “storm of the decade” Ciara, for instance, excludes losses from coastal or inland flooding and only relates to those caused by wind.
Indeed, underwriting floods has been more up the alley of reinsurers, but Milliman believes more market players can take part by combining property insurance ratemaking, advanced underwriting technologies, and pricing and profitability analysis.
On its website, Milliman says advanced modelling and data innovation are enabling the emergence of more options for those that need protection.
Meanwhile RSA chief executive Stephen Hester, according to a report by the Financial Times, is of the view that there is sufficient insurance capital to go around.
“The world has got enough insurance capital to protect against flood risk,” the publication quoted the CEO as saying. “It’s a question of whether society wants people who live on flood plains to pay the right price for the risk, or whether there should be some sort of subsidy.”
One example of a provider rising to the occasion is London-based insurtech FloodFlash, the parametric proposition of which has enabled it to compensate commercial clients just a day after the Ciara-related floods.
“We want to set the standard for rapid, transparent payouts within the catastrophe market,” asserted FloodFlash co-founder Adam Rimmer in a release. “Paying out within a day is only the beginning. One day we hope to pay clients within minutes of confirming a flood.”
The start-up’s approach does not rely on claims adjustment but instead features a defined trigger point or threshold and a pre-agreed settlement figure.
In the UK, Honister Pass in Cumbria recorded 179.8mm of rain over the weekend of February 09 because of Ciara, according to the Met Office.