Cloudbursts in urban areas underestimated: Swiss Re

Insurers underestimating the risk of cloudbursts, particularly in urban areas, are putting themselves at risk, Swiss Re cautioned in a release.
A cloudburst is a sudden, very heavy rainfall.
In a posting on its Web site, ‘The ripples of heavy cloudbursts,’ Swiss Re notes that Hull, United Kingdom endured rainfall levels of between 100 mm to 135 mm over a three-day period in June 2007. Isatanbul saw levels of up to 130 mm in a two-day period in September 2009, and in July 2011, a heavy cloudburst dumped about 160 mm over Copenhagen in less than 24 hours.
The Hull flooding resulted in $270 million in insured losses. Istanbul losses were $430 million and Copenhagen could cost more than $800 million.
“Cities are especially vulnerable to heavy cloudbursts,” the Swiss Re post says. “One factor is high concentration of buildings and other assets. Average claim size for residential structures is typically low, but substantial for commercial and industrial businesses.
Impervious city surfaces – concrete and asphalt – are a second factor driving up the severity of the risk. “One consequence of this is that large amounts of rainwater drain through sewer systems,” the report says. “Once system capacity is exceeded, water overflows and penetrates into basements and ground floors of buildings.”
Local torrential rainfall events in city areas are typically not well represented in probabilistic flood risk models, and there is a strong risk to underestimate the contribution of such losses in the costing, Swiss Re said.
“This is even more important for those markets in which no probabilistic flood costing methodology is available,” the report says.