Catastrophe risk modelling specialist AIR Worldwide announced this week some timely updates to its Hurricane and Inland Flood Models for the United States.
With hurricane season now underway and all forecasts pointing to an active year for tropical storms near the U.S., AIR’s risk model updates come at just the right time for the reinsurance and insurance-linked securities (ILS) industry.
AIR’s latest model updates include, for the U.S. hurricane risk model, an update in the form of a new module for precipitation-induced flood risk, while the inland flood risk model includes significant enhancements to both hazard and vulnerability, such as a new, higher-resolution digital terrain model.
Together, AIR Worldwide notes that the models will help insurance and reinsurance firms, as well as ILS funds and investors we’d add, “enhance their risk management and have a unified and comprehensive view of flood risk across the United States and for all property lines of business.”
“By leveraging innovative methodologies that realistically simulate rainfall patterns of tropical cyclones using advanced machine learning techniques, we updated the hurricane model to include the explicit and probabilistic modeling of precipitation-induced flooding associated with hurricanes,” explained Dr. Boyko Dodov, vice president, research, AIR Worldwide.
“Together, these models provide a unified view of flood risk from all sources—tropical and non-tropical precipitation on- and-off the floodplains and coastal storm surge—across the contiguous United States,” Dodov added.
The 2017 and 2018 hurricane seasons saw extreme levels of precipitation as well as enormous flood losses for the insurance and reinsurance industry.
AIR notes that the extreme precipitation levels seen in hurricane seasons of the last decade have, “brought to the forefront the importance of modeling flood risk outside floodplains.”
Hence these model updates and the new module for analysing the precipitation-induced flood risk of U.S. hurricanes come at a very good time for the industry, especially for the ILS market as it looks to better understand the flood risk within its portfolios.