Global Parametrics and specialist flood risk modeller Fathom have partnered to develop a global parametric flood index that can be used in triggers of risk transfer, insurance and reinsurance arrangements.
Global Parametrics is set to utilise high resolution data from Fathom to create the new flood risk index, significantly reducing basis risk for clients.
The new flood risk index, called the Flood Depth Index (FDI), will be put to work in the B-Ready programme, a parametric risk insurance collaboration between Oxfam, Plan International, and Global Parametrics, that provides immediate, automatic payments to developing countries when a disaster occurs.
Global Parametrics has combined high resolution data from Fathom with streamflow data from the ECMWF GloFAS hydrological and monitoring system, in order to create its parametric flood index.
It is said to be the “first globally consistent parametric flood index”, offering historical, realtime and forecast capabilities for risk transfer.
It’s expected that the Flood Depth Index will provide a data source on which parametric triggers can be constructed for risk transfer, insurance and reinsurance covers anywhere in the world.
“We’re able to provide unparalleled flood hazard maps to Global Parametrics, which derive local flood depth from the daily return period of streamflow,” Christopher Sampson at Fathom commented. “We have global expertise in a wide range of sectors including (re)insurance, international development, conservation, emergency response and multi-national corporations. With our transparently open and peer-reviewed approach driven by scientific research, this is an ideal partnership.”
The new parametric flood risk triggers will first be used in the Philippines, and later in Indonesia and Sudan, within the B-Ready programme.
It will then also be put to work in more than 22 countries across Latin America, Asia and Africa as part of Global Parametric’s ARDIS programme, which was launched in partnership with VisionFund International, a global microfinance provider.
“We are delighted to partner with Fathom, and now have the ability to characterise flood risk anywhere in the world at a localised scale – regardless of the quality of traditionally available data. This furthers our mandate to provide innovative climate protection and resilience solutions to those underserved globally. We look forward to continuing to work together to support this commitment,” explained Hector Ibarra, CEO at Global Parametrics.
The fact this new index offering is global may prove attractive to other risk transfer buyers, including large corporate buyers of insurance with flood exposure (remember Thailand), as well perhaps as reinsurance firms with concentrated exposure to flood risks.