Blog: Tackle Flood Exposure with High Resolution Hazard Data

Integration of innovative data, analytics, and InsurTech to help insurers underwrite and manage portfolios with United States flood risk

Flooding is the most common1 natural peril in the United States. However, many insurers have been discouraged from entering the private flood market, or even advising customers on their potential risks. That’s because underwriters have needed a better way to confidently both close the protection gap through modern data and analytics on property-specific flood risk information while also easily monitoring in near real time for unwanted risk accumulation at a portfolio level.

The risk of flooding is far more widespread than many think. Flooding isn’t limited to 100-year floodplains as designated by the Federal Emergency Management Agency (FEMA), which oversees the National Flood Insurance Program (NFIP) as the principal market for insuring these losses. Location-level flooding is highly variable depending on a range of factors, including elevation, topography, and drainage. According to a Verisk study published last year, there are 62 million residential locations in the United States that are at moderate to extreme flood risk.

The question is: how do you determine the level of flood risk in a property? And how do you see the potential impact of that risk on your book of business?

Addressing the need: Flood analytics in a portfolio management platform

Verisk is addressing this need with the integration of WaterLine™, Verisk’s flood underwriting data and analytics tool, into Sequel Impact, a Verisk aggregation and portfolio management technology. By integrating WaterLine data into the Sequel Impact platform, underwriters have access to enhanced property-level data and analytics that enable them to view and analyse risks in the context of their portfolios. By fuelling deeper analysis and better understanding of U.S. flood exposure, underwriters can select and price risk more accurately, streamline workflows, and optimize distribution options.

WaterLine can score flood risk for personal and commercial properties in the contiguous United States, including those not traditionally considered flood-prone. For insurers that don’t offer flood insurance, WaterLine can also help them serve customers better with critical information about their level of flood risk. WaterLine scores properties on a 0-to-100 relative risk scale and shows contributing factors. The tool uses advanced probabilistic simulations based on hydrologic and hydraulic engineering from Verisk’s AIR®’s Inland Flood Model.

Sequel Impact enables underwriters to capture and aggregate complex exposures in a single view in near-real time. As well as quantifying total risk exposure in seconds, Sequel Impact also allows underwriters to overlay simulated flood events, visualize non-modelled CAT risk and calculate loss scenarios. The technology enables pinpoint risk modelling and provides a host of additional reporting and analysis features.

The integration is part of Verisk’s ongoing efforts to bring a vibrant private flood insurance market back to the United States. Verisk offers a growing suite of products and tools to help insurers including policy programs for personal and commercial lines, as well as individual risk assessment, portfolio analysis, and claims estimation.

Together, these tools can offer insurers greater control over their exposure to flood risk, their customer relationships, and their reputation in the face of whatever nature sends their way.

1.Federal Emergency Management Agency (FEMA); fema.gov