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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