Water worries

It has been a little slow this year, catastrophe-wise, but it would be foolish to believe what happens in one year will necessarily follow in the next.

Clearly, there is no shortage of perils to elicit concern and produce costs for all: governments, insurers, reinsurers and policyholders.

But perhaps no other peril is so top of mind in this country as flooding and water-related damage, what with the steady stream of reminders.

2013 was a year in which severe storms resulted in flooding that propelled Canada’s insurance sector to record insured losses. That is beyond the hefty tab for governments left to clean up.

The year was such that the events in Canada – globally seen as a bit of a lightweight, catastrophe-wise – were enough to catch the attention of report writers usually focused elsewhere.

Concern over the damage that water can do is not new, but that concern has a certain ebb and flow that sometimes feels a bit too languid to have any hope of successfully negotiating the inevitable wave of damage that is coming and will not wait for yet more discussion.

Waiting seems not to be an option if one considers findings of a new study from the Union of Concerned Scientists. The study looked at east and Gulf Coast communities in the United States, based on an analysis of 52 National Oceanic and Atmospheric Administration tide gauges using moderate sea level rise projections.

The report revealed that in the next 15 years, most of the towns included in the analysis could see a tripling in the number of high-tide floods each year and in 30 years, a 10-fold increase, compared to historic levels.

Among other things, it recommends municipalities – with state and federal help – prioritize and incentivize flood-proofing of homes, neighbourhoods and key infrastructure; curtail development in areas subject to tidal flooding; and consider the risks and benefits of adaptation measures.

Very much in that vein are more recommendations, again from the U.S., that include using market-based mechanisms to more directly match insurance coverage to relative risk and adopting prudent, hazard-specific land use measures and strong codes and standards for new and existing buildings.

These are recommendations that often have also been made in Canada, with talk of resilience gaining profile and attracting more supporters. Some good work is being done, but, certainly, more is needed… and quickly.

Munich Re reported the number of weather-related natural catastrophes worldwide that resulted in losses increased roughly threefold from 1980 to 2013. “Changing weather risk patterns necessitate an adjusted perception of risk and bespoke reinsurance protection. We need a better understanding of hazards and potential accumulation risks, and we need to analyze the risk locations in this regard,” said Ludger Arnoldussen, a member of Munich Re’s Board of Management.

Information, handled correctly, can never be a bad thing. For example, a new study out of the University of California, Irvine found that data from NASA satellites – which can provide a means to observe monthly variations in total water storage within large river basins based on measurements of tiny changes in Earth’s gravitational field – can greatly improve predictions of how likely a river basin is to overflow months before it does.

The information “could result in earlier flood warnings, potentially saving lives and property,” notes the research, published online in the journal, Nature Geoscience.

Many insurers are taking positive steps in terms of climate modelling and analysis, notes a report released in October by Ceres. In many instances, insurers are using climate-informed catastrophe models to better quantify climate-related risks from more frequent and intense weather catastrophes, it states.

Improving climate change scenarios and impact assessments can help in fine-tuning insurer product offerings and pricing, the report adds. “This is not a partisan issue, it’s a financial solvency issue and a consumer protection issue,” Washington Insurance commissioner Mike Kreidler wrote in the report forward.