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FLOOD MODELLING FOR INSURERSFROM DATA TO DECISIONSDr Iain Willis, Director, JBA Risk Management Singapore

Mr Ian Millinship, Senior Catastrophe Risk Modeller, JBA Risk Management UK

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Overview

Introductions

Agenda

• Session 1: (9:30 – ~10:45) Hydrology, Hydraulic Modelling - Ian Millinship

• Tea/Coffee Break (15 minutes)

• Session 2: (~10:45 – 12:00) Hazard maps, Probabilistic (CAT) Models – Iain Willis

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Who are we?

2017

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Why do we model flood?Flood losses are increasing, particularly in Asia

Flood models allow clients to assess and manage their exposure

Underwriting

How to you assess the potential of a location flooding? What will be the expected claim?

Catastrophe models

How do you know the potential accumulated exposure to your portfolio? Are your event limits adequate?

Slide 4Confidential

2013

Non-life premium growth

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Flooding in Penang

1. 5 November 20172. 80% of the state was hit by typhoon-like winds and heavy rain3. Penang

1. George Town – 7 dead & 3,365 displaced into shelters. Floodwater reported to rise to 3-4m

1. Kedah – 2,000 evacuated2. Perak – 103 evacuated

4. Parts of Penang Hospital flooded5. Penang government confirmed floods were due to poor drainage systemReferences

http://w ww.channelnewsasia.com/new s/asiapacif ic/penang-flood-at-least-7-dead-as-authorities-issue-heavy-rain-9376756?view=DEFAULT

http://www.channelnewsasia.com/news/asiapacific/penang-flood-at-least-7-dead-as-authorities-issue-heavy-rain-9376756?view=DEFAULT

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Georgetown



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JBA Hazard Maps in George Town

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Penang hospital

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Stadium Bandaraya

https://sg.new s.yahoo.com/photos-penang-inundated-floods-slideshow-wp-010054634/photo-p-aerial-view -shows-flooded-photo-010054240.html


HYDROLOGY AND HYDRAULIC MODELLING

SESSION 1: INTRODUCTION TO FLOOD MODELLING

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What is a flood hazard map?

• Describes areas of high and low flood risk

• Can be produced for a range of likelihoods (probabilities) described by return period

• Iain will describe how maps are used after the break

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Small features have a big impact

Slide 15Confidential

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How do we create flood maps?

Hydrology

How much water?

Hydraulic modelling

Where does the water go?



Hydrology

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Measuring river flow

The need to quantify river flow• Select a cross section and measure the area: a (m2)

• Identify the mean flow velocity through the cross

Velocity cross section profile Empirical flow to level relationship

• Flow equals: a x v = (m3s-1 or cumecs)

• Relate each river level to an equivalent flow estimate (rating curve)

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Measuring river flow

Loggers and telemetry allow us to understand this relationship over timeAllow assessment of the severity of flow

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Using river flow data


Flo

w (

cu

me

cs

)

0

50

100

1958 20171. Examine historical record 2. Determine the frequency distribution:

How often does a n-year flow occur?

020406080

100

0 50 100 150 200

Flo

w (

cu

me

s)

return period (years)

3. Derive flow growth curves

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Using river flow data

3. Derive time-to-peak values for flood hydrographs using catchment descriptors at each gauge

4. Generate at regular points along the network, apply hydrographs using catchment descriptors for each point

Catchment descriptors:

• Urban extent• Percentage runoff• Attenuation due to reservoirs & lakes• Baseflow index• Catchment wetness index• Catchment area


Hydraulic modelling

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Some physics: conservation laws

Conservation of mass• We can’t magically create or destroy matter• Imagine a “control volume” (a small tank) what goes in = what comes out – change in storage rate of flow across boundary = rate of change in storage

Conservation of momentum• Similarly, Newton’s laws mean we can’t create or destroy momentum without an external force• Mass x velocity going in = mass x velocity coming out

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Basic 2D flow model structure

ground elevation (DTM)

depth of flow between cells

friction

friction

Plan Cross section

A B

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The “Shallow Water Equations”

What happens if we drop water onto a tranquil lake (...or jump into a swimming pool...) with no friction “allowed”?

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Real world is complex

n

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Digital terrain data for flow routing


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Thailand 2011 flood



BREAK


SESSION 2: RISK MANAGEMENT USING FLOOD HAZARD MAPS AND PROBABILISTIC (CAT) MODELS

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How do clients use flood hazard maps?

Spatial:

• Directly using GIS software• Via software providers such as

Munich Re (NATHAN), SpatialKey, ESRI

• Exposure assessment of a portfolio against hazard maps by JBA

Tabulated:

• As scores: Risk Scores provide a relative indication of flood risk administrative boundary.

Pincode Risk Score

400051 LOW

400050 MEDIUM

400052 HIGH

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Catastrophe Models: An introductionWhy do we need Cat models?

• Short historical records do not contain the full range of possible future extreme behaviour

• Natural hazard losses are correlated in time and space• We want to know about risk (as opposed to only hazard) net of

insurance structures

What are Cat models?• Hybrid physical-statistical models• Input portfolio of risks with insurance conditions• Quantify damage and loss with likelihood ?

PORTFOLIO

CAT MODEL

LOSS

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Hazard maps

SEVERITY

Proportion of area

flooded, minimum

and maximum depth

for 6 return periods

Event set

MITIGATION

Standard of Protection

Area benefiting from

defence

Defences Built environment

BUILDINGS

Property type per location

Analysis polygons

RESOLUTION

Portfolio and damage

calculation resolution

Lat / Long or

Administrative boundary

Vulnerability

DAMAGE

Percent damage per

hazard intensity

MODEL

FREQUENCY AND

INTENSITY

Return period by

gauge, by peril

From Hazard to Risk

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Hazard: Maps

What is the distribution of hazard affecting our analysis cells?

Step 1Summarise the data at VRG

Step 2Transfer to analysis cell

A B C

Proportion area affected:A = 30% B = 50% C = 100%

Min depth:A = 0m B = 0m C = 0.5m

Max depth:A = 0.5m B = 1.0m C = 2.6m

Postcode boundary

River

Flood extent

VRG

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Hazard: Event setCatalogue of events covering 10,000 years

Defined at the observation point (river / rain gauge)ip_event_2020

Return Period (years)

! 2 - 10

! 10 - 500

! 500 - 1,500

! 1,500 - 10,000

! 10,000 - 40,000

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Flood Hazard: Combine

Hazard mapsSeverity (depth &

local extent)

Event setMacro-scale

extent Frequency

Combined hazard dataProportion of area flooded,

minimum and maximum depth, by event, by cell

DefencesLocation

Standard of protection

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Importance of geocoding


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Are you buying enough reinsurance?

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

0 100 200 300 400 500

Lo

ss (

MY

R)

Return Period

Client 1Client 2Client 3Client 4Client 5

25 60 200

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Reducing reinsurance requirements


0

1

2

3

4

5

6

7

8

0 250 500 750 1000

Loss

(Mill

ion

USD

)

Return Period

2013

2014

2015

Annual portfolio change vs. Surplus

cover

2013 = 4.9m

2014 = 4.5m

2015 = 4.2m

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Thailand 2011

Observed

Modelled

2010 2006

Source: Royal Irrigation department, Thailand

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Why model flood?

Flood has and will cause losses to your portfolioUnderwriting

• How to you assess the potential of a location flooding?

• What will be the expected claim?

Catastrophe models

• How do you know the potential accumulated exposure to your portfolio?

• Are your event limits adequate?


Any questions?



This presentation was prepared for SEADPRI Forum 2017 by Ian Millinship and Iain Willis. © JBA Risk Management Limited 2017

The content in this presentation belongs to JBA Risk Management Limited. Don’t steal it. It’s only a presentation and the data presented are modelled, so don’t rely on them. If you do, the risk is all your own and JBA won’t be held responsible or liable.

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