Globally, the built environment continues to expand, often into areas that are more exposed to severe weather events. In the U.S., further development inside river floodplains and along coastal fringes is significantly adding to the total property inventory and related insured value located in flood-prone areas. The increase in U.S. flood exposure, combined with a warming global atmosphere, is expected to lead to a growth in flood-related economic loss over time.
Is flood an uninsurable risk?
When the National Flood Insurance Program (NFIP) was launched by FEMA in 1968, a long-standing industry position viewed the flood peril as uninsurable by the private market. This widely held and entrenched position was also reasonable due to poor or non-existent mapping tools and inefficient methods for measuring flood exposure. However, technology to assess and monitor flood risk continues to advance, positioning flood as a significant re/insurance growth opportunity.
Increasing challenges driving opportunity
Growth strategies for flood can be engineered behind a cutting edge suite of analytical tools. Aon Benfield is distinctly positioned to provide guidance to companies journeying through the largely untapped U.S. flood opportunity. We assist insurers to:
- Expand product strategy and design
- Identify risk appetite with consistent flood hazard data used for underwriting and risk acceptance
- Calculate technical insurance rates for individual properties via a dashboard feature
- Orchestrate any needed alignments with other parties to issue product or assume quota share exposure
- Apply flood catastrophe models to optimize portfolios for pricing; selection, and gaining acceptable levels of volatility (i.e., net of any reinsurance)
Flood analytics toolkit
Multi-model view for inland flood
Aon Benfield offers the most views for inland flood - an advantage that embraces the transparency of the Impact Forecasting model - while offering an alternative to the general reliance upon FEMA flood maps. Along with National Flood Services, our firm is ready to assist clients to develop a flood strategy that is customized to underwriting and balance sheet risk tolerances.
Aon UK Limited is authorised and regulated by the Financial Conduct Authority. FP#12914