Guy Carpenter launched its G-CAT Canada Flood Model, which it describes as the first ever probabilistic model for Canada that enables insurers to assess their exposure to flood, Canada’s most frequently occurring natural hazard.

Large areas of Canada experience flooding, with a number of such damaging events occurring in recent years. The June 2013 Alberta floods, among the worst in Canadian history, incurred insured losses estimated at CAD1.8 billion ($1.5 billion), with the economic loss estimated at CAD6.2 billion ($5 billion).

“By launching the G-CAT Canada Flood Model, Guy Carpenter addresses the concern of extreme losses from natural hazards in Canada, such as flooding,” said Donald Callahan, president and CEO of Guy Carpenter Canada. “To produce this state-of-the-art flood model for the Canadian insurance market, Guy Carpenter collaborated with experts in hydrological and hydraulic modeling to produce simulations for hurricane, rainfall and river flow flooding catastrophes.”

“As part of Guy Carpenter’s multiyear global flood initiative, the G-CAT Canada Flood Model provides clients with best-in-class flood hazard management capabilities and includes the ability to carry out exposure management, scenario testing and probabilistic flood assessment,” according to Mark Weatherhead, head of model development at Guy Carpenter.

The model enables clients to evaluate both exposure to flood and the financial cost of a range of possible flood events. In addition, the model includes a comprehensive view of river flood defenses throughout the country and has incorporated historic flood events such as the Alberta floods from two years ago.

Flood maps are created using two hydraulic modeling techniques that take into account Canada’s large geographic area and the diversity of its landscapes as well as the population density of the area being modeled, Guy Carpenter said in a statement.

Event losses are based on probability distributions representing the vulnerability of insured exposures derived from a number of sources. Those sources include detailed claims data from a variety of Canadian insurers based on recent flood events, specialized knowledge of the Canadian insurance market, and insight gained during the development of flood models in other territories, Carpenter said.

The flood model produces losses not only within the flooded area of a simulated event but also near the margins of an event’s footprint. It uses Guy Carpenter’s proprietary software to keep track of a number of metrics for each simulated loss from the event set and gives the uncertainty associated with the mean losses.

Source: Guy Carpenter