AIR Worldwide releases inland flood model for U.S.

Catastrophe risk modelling firm AIR Worldwide has released what it calls the insurance industry’s first inland flood model for the United States to help insurers and other industry stakeholders better understand the severity, frequency and location of potential flood events on and off the country’s floodplains.

This state-of-the-art offering is a detailed, physically based, probabilistic inland flood model that will help users quantify flood risk in the U.S., notes a statement issued Monday by AIR Worldwide, a Verisk Analytics business.

The AIR Inland Flood Model for the United States will provide a comprehensive tool for assessing and managing inland flood risk at a high resolution for locations on and off the many and varied floodplains across the U.S., AIR Worldwide reports.

“Until now, the industry has lacked the tools to effectively quantify flood risk in the United States,” Dr. Jayanta Guin, executive vice president of AIR Worldwide, says in the statement, calling the offering a “game-changing modelling solution” for the market.

Noting that the applications of flood modelling technology span the entire insurance value chain, AIR Worldwide suggests benefits for insurers may include a more robust view of individual risk pricing sensitivity and new opportunities for flood insurance product innovation. Risk managers, for their part, can better identify the assets driving their overall risk and help develop and design cost-effective risk transfer strategies to manage that risk, the statement adds.

The model defines flood events based on a physical understanding of what causes flooding and how floods propagate through the country’s extensive river networks, capturing inland flood risk for all 18 hydrological regions across the contiguous U.S., AIR Worldwide reports. The area, measuring approximately 3 million square miles, has a river network 1.4 million miles long and includes 335,000 distinct drainage catchments.

The model – which simulates both the weather systems and the flooding they cause – accounts for a broad range of climatic conditions, snowmelt, local soil conditions, land use and topography. “Damage is determined by calculating the inundation depth at each affected location, taking into account the country’s extensive system of levees and their probability of failure, as well as regional differences in building codes and building practices,” AIR Worldwide notes.

Further, the model incorporates off-floodplain flooding, which can happen as a result of particularly intense rainfall and poor drainage, among other factors.

The model – currently available for Version 2.0 of the Touchstone and Version 16 of the CATRADER catastrophe risk management systems – is able to capture both large- and small-scale precipitation patterns, including the bursts of extreme rainfall that contribute greatly to highly localized flooding, notes the company statement.

AIR Worldwide reports the Federal Emergency Management Agency (FEMA) is currently undertaking a Flood Insurance Risk Study project, in which AIR Worldwide is participating and offering its inland flood model. FEMA is looking to assess the potential of the private sector – including insurers, reinsurers and capital markets – to take on portions of the flood risk, the statement adds.