JBA Risk Management, the global flood risk modeller, has developed the first probabilistic catastrophe model to factor in the effects of climate change on flood risk for insurers and reinsurers in the UK.
The launch of the UK Climate Change Flood Model is accompanied by the projection that annual average losses for residential properties in the UK could rise by 25-30% over the next 20 years as a result of climate change.
The new model draws on the latest scientific understanding of climate change, providing quantitative results that provide re/insurers with an insight into potential changes to UK flood risk by 2040.
JBA told Reinsurance News, “This is, to our knowledge, the first UK Climate Change Flood Model – a probabilistic catastrophe model developed to analyse future flood risk in the UK. It provides an indication of the potential change in financial loss due to flooding in the UK by 2040. When used in conjunction with JBA’s UK Flood Model 2018, released last month, results can offer a comparable insight into present-day and future risk.”
The increased loss figure of 25-30% is based on a residential property portfolio without adjustment for limits, deductibles, or policies with flood exclusions, and supports projections from research and government data that the number of major UK floods events is set to rise.
Jane Toothill, Director of JBA, commented: “JBA’s UK Climate Change Flood Model is a ground-breaking catastrophe model specifically designed to provide an indication of possible future changes to flood risk across the country.
“We have taken highly-detailed and complex scientific data and created a functional, forward-looking tool that insurers can use in conjunction with our UK Flood Model for decision-making and portfolio management.”
Gary McInally, Chief Actuary at Flood Re, added: “The impact of climate change on flood severity and frequency presents increased uncertainty for insurers and reinsurers. Only the largest firms have the ability to develop in-house views on future flood risk.
“We are pleased to see the release of this model, enabling both large and smaller companies to quantify the potential impact on their exposure for the first time”.
The JBA UK Climate Change Flood Model is currently available on JBA’s JCalf platform and Simplitium’s ModEx.