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Mitigating Flood Risk with Location Intelligence

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While some weather patterns are predictable, extreme weather events tend to run on their own calendar. Unfortunately, severe weather events have a tendency to cause the most damage and are occurring on a more frequent basis, resulting in a substantial financial impact on Canadian insurers.   According to Catastrophe Indices and Quantification Inc. (CatIQ), in 2018 insured damage from severe weather events across Canada reached a staggering $1.9 billion.

Canada will no doubt continue to experience catastrophic weather events, but insurance professionals have solutions available that can help mitigate risks and reduce the financial impact of these events.  Location Intelligence is an emerging field that provides substantial benefit to the insurance industry – from policy quote and approval processes through to claims management and customer service.

Advances in cloud computing are enabling insurers to migrate traditional geospatial analytics from an off-line manual process to real-time integrated solutions and automated workflows.  Using location as a common point of reference, users are able to connect policy, property, claims and third-party data together to gain insight into the property and the surrounding area – allowing them to quickly analyze, visualize and assess property risk.

One common use case is the real-time, automated analysis of a proposed policy vs flood zones, earthquake zones and other potential perils.  Getting a high precision view of where a property sits versus identified risks, allows for more accurate assessments. The availability of real-time location data offers two primary benefits.  The first is increased productivity, delivered by automating assessments and consolidating the output on one screen so that agents can make better faster decisions.  The second is proper pricing for the risk scenarios being proposed.  The key to enabling these benefits is to empower the end user with information in real time.

While an agent is assessing the risk of a potential property, location data can answer a multitude of questions: Is this property exposed to a 1/20, 1/100, 1/200, or 1/1500 year flood event? What are the types and magnitude of historical claims in the surrounding area? Is my accumulation risk too high, or am I able to take on any more policies in this area? Are the current policies priced to cover identified risk? The answers to these questions are imperative when an insurer is trying to accurately calculate total risk exposure from perils and flooding, and accurately quote the policy in a timely manner.

While severe weather events and flooding will continue to present risks to Canadian insurers, access to real-time location data, including flood information, can enable insurers to make more informed decisions during the approval process. While the weather will continue to be unpredictable, location intelligence is a powerful tool to protect your bottom line.

To learn more read our White Paper:  Mitigating Risk with Location Intelligence

 

Additional Reading:

Top 3 Ways Location Intelligence Empowers Underwriters

 

Flood Data and Location Intelligence

Leveraging Flood Analysis to Mitigate Risk

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Condo popularity is on the rise and for those financing the properties, whether it be a reputable financial institution or the bank of mom and Dad, is your investment protected? What happens in the event of a flood and are you asking all of the right questions before investing? For example, are you investing in properties that are a high risk to flood? With help from DMTI, we’re able to take a closer look on a few regions to understand your exposure.

What risk does flood pose in Canada?

Floods are the most frequently occurring natural hazard in Canada. According to the Institute for Catastrophic Loss Reduction (ICLR), the Canadian Disaster Database indicates that 241 flood disasters have occurred in Canada between the years 1900 and 2005, almost five times as many as the next most common disaster (wildfire). Over the past few decades, urban flooding has been a growing problem, resulting in more than $20 billion in flood damage between 2003 and 2012, according to the federal government.

What is the risk of flood peril to condos in Canada?

In order to provide answers to this question, a condominium database for Canada was created by Teranet and DMTI Spatial combined with flood hazard maps highlighting areas that could be impacted by river flood (where the water rises over its banks), surface water (where water will pool due to elevation differences) and storm surge (coastal flooding). Three key markets were focused on as part of this analysis: Toronto, Vancouver and Montreal.

Toronto, ON

The flood risk analysis (using 1/100 year return period) for Toronto revealed that approx. 1.2% of all condo buildings may be impacted by river flood risk and approx. 5.9% of all condo buildings may be impacted by surface water flood risk.

Toronto

Toronto

Figure #1: Toronto, Ontario – Condos falling within the river flood hazard map for the 1/100 year return period.

Vancouver, BC

The flood risk analysis (using the 1/100 year return period) in Vancouver revealed that approx. 7.3% of all condo buildings may be impacted by surface water risk and approx. 3.2% of all condo buildings may be impacted by storm surge flood risk

Figure 2: Vancouver, British Columbia – Condos falling within the surface water hazard map for the 1/100 year return period

Montreal, QC

The flood analysis (using the 1/100 year return period) in Toronto revealed that approx. 15.0% of all condo buildings may be impacted by river flood risk and approx. 11.4% of all condo buildings may be impacted by surface water flood risk.

Figure 3: Montreal, Quebec – Condos falling within the surface water hazard map for the 1/100 year return period

What does this mean to my business?

As per the Insurance Bureau of Canada (IBC) for flood perils, 20% of Canadian households could be qualified as high risk, and about 10% of those would be considered very high risk which equates to about 1.8 million households. Understanding the impact of natural disasters such as catastrophic flooding is a complex issue. Many customers are challenged with identifying and mitigating their total risk and exposure within their existing portfolio. Here are some additional areas for consideration that would benefit from this type of analysis:

  • Risk Mitigation: Enhance real-time mortgage adjudication processes, speed time to decision and reduce manual intervention with enhanced insight into the precise location of the property as it relates to a flood zone.
  • Risk Analysis: Validate capital adequacy requirements and better understand and reduce exposure by being able to assess the total accumulated risk to a portfolio as it relates to proximity within flood plains.
  • Site Planning: Enhance infrastructure and site planning analysis by understanding the potential risk of flood before deployment.

The analysis conducted by DMTI Spatial using its platform Location Hub supports real-time flood risk analysis, portfolio accumulation risk analysis and the real-time visualization of the potential exposure to flood zones. This provides key data of importance to better forecast exposure and mitigate risk.

Contact us to learn more