FLOOD MODELLING FOR INSURERSancst.org/wp-content/uploads/2017/11/Presentation-Malaysia-Insura… ·...

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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

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Georgetown

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

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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

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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?

Slide 16Confidential

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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

Slide 20Confidential

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

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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

Slide 28Confidential

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Thailand 2011 flood

Slide 29Confidential

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BREAK

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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

Slide 40Confidential

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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

Slide 42Confidential

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?

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Any questions?

Slide 45Confidential

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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.

Boring but important bits