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Risk mapping and zoning approaches in European insurance markets Roland NUSSBAUM Managing Director of Mission Risques Naturels (FR) Chairman of Natural Hazards Working Group Comité Européen des Assurances (CEA) “The International Catastrophic Risks Forum" Bucharest, October 1st 2007 1 Risk mapping and zoning approaches in Europe OUTLINE • • • Typology of CAT extended coverages in European insurance markets Introducing CEA relevant activities • User needs, data and scope of developments Flood and seismic hazard zoning tools Conclusions • Annexes • 2 Typology of NATCAT extended coverages in European insurance markets Optionnal Compulsory Insurers are not risk carryer * New / modified extended coverages: Color intensity according to market penetration of extended cover: Recently put in place * + FLOODS and/or SEISMIC RISK * * + * * * In project……… + * * * * + 3 COMITE EUROPEEN DES ASSURANCES o Federation of European insurance associations www.cea.assur.org o Property Committee o Natural Hazards Working Group (NH WG) 4 Cooperations & experience sharing between CEA markets • Mutual information on market situation and developments • Hazard mapping and zoning • Insurers and flood risk prevention • Catastrophic claims management • Climate change : report July 2007 * Downloadable on CEA’s website: www.cea.assur.org 5 1. Users’ needs, data, services and scope of developments French experience Conducted by MRN 6 Categories of needs within insurance Evolution in France Job Underwriting risk survey Purpose Prevention incentive Risk exposure eval° Trends Evolution of ins. regime Claims consistency control Claims management Reinsurance cessions Rapid evaluation of total claim Crisis management CATNAT Risk accumulations Reinsurance underwrinting Régime CATNAT Offre outils modélisation Solvency II Statistics Acturarial sc. Risk management Portfolio exposure eval° and monitoring Asset allocation Solvency II CATNAT Regime Real estate assets porforlio managment Prevention and crisis preparedness within insurance company • Safety managmeent plan • Susbtainablity reportng duties for companies Type of service Site by site scoring Accumulation modelling Site by site scoring modelling 7 7 Data, services and scope of use categories of data Scoring Exposure Assessment Site by site Modelling Hazards Prevention policy Territories Service / scope General interest Public policy Referentials Vulnerability Loss records ? Underwriting Insurance portfolios Private assets Competition Private market players 8 2. Flood and seismic hazard zoning tools General comments 9 Flood and seismic hazard exposure 10 Floods, storms and earthquakes Annual probability of exceedance = f(losses) Sources: DFNK, GFZ 11 2.1. Flood zoning tools used by european insurance markets A CEA Contribution to EXCIMAP Atlas and guide of good practices to be published by EU Commission DG ENV See Annex to CEA report “Reducing the Social and Economic Impact of Climate Change and Natural Catastrophes Insurance Solutions and Public-Private Partnerships” July 2007 12 Typology & evolution of flood hazard zoning tools on European insurance markets Market players with data modeling tools from agencies PPPs Hazard data Proprietary developments at market initiative Directives : FLOODS market / project INSPIRE (USA) NFIP / FIRM DE : ZURS 1 & 2 ? UK : Informal agreement UK BE 2006 ABI(+CML) - EA ? CZ : FRAT ? AU : PPP AU : HORA VVO – LM 2004-6 Public site 2007 FR : MRN 2004-7 Service Intranet ? IT : SIGRA PL : project T 13 2.2. Seismic risk in European insurance markets First results of enquiries and best practices exchanges between CEA Member Associations 14 Seismic risk Availability of hazard maps ? 15 seismic hazard information availability Source : B. Ranguelov, Bulgarian Academy of Sciences , at SENS’2006, June 2006 16 Exposed properties per seismic zone BREAKDOWN OF EXISTING PROPERTIES WITHIN THE COUNTRY I 71,2% II 27,0% III 1,8% II SEISMIC ZONES FROM 2004 (3 ZONES) GREECE 17 Seismic risk Availability of PML scenarios 18 3. Conclusions • Huge technical developments by insurance markets, based on GIS technologies and modelling, to improve cat insurability • Positive effect of best practices exchange between insurance markets: role of CEA – invitation to join CEA Natural Hazard Working Group activities • EU policies: INFSO / INSPIRE, R&D / FP7, REGIO, ENV / Climate change adaptation strategy, flood action programme / Flood directive…) favour the trends towards PPPs for: o data production, sharing and dissemination, o joining efforts in exposure assessments Deterministic Probabilistic o promoting insurance services as economic incentives for risk prevention 19 Thank you for your attention www.cea.assur.org www.mrn-gpsa.org [email protected] 20 Risk mapping and zoning approaches in Europe Annexes to the presentation Additionnal maps and illustrative examples 21 Plans de prévention des risques (PPR) Developing a professional tool for scoring indicators about their adequacy and efficiency Sources : DDE 65 et 94 Situation / (hazard, municipality) Test on Absence ofPPR assets PPR approved assets + adequacy PPR mature assets + adequacy + efficiency 22 Intranet geoservices infrastructure offered by MRN to French insurance companies Through a unique access point, insurance companies have two categories of services : - online consultation of a site exposure and report edition - downloading of numeric data sets on natural hazard zonations 23 23 The MRN geoservices intranet platform This example shows a consultation of the information available for flood and subsidence hazards at the following adress: 1 rue Bannier 45 000 Orléans 24 24 Multi-sites « scoring » for an insurance portfolio the various addresses have been geocoded, these insured sites are then « qualified » with respect to hazard, according to i available data and considering their credibility 25 Modelling of an EQ on the French Riviera synthetic event Magnitude 6.1 Epicenter: in the sea, near Menton city 26 Modelling of an EQ on the French Riviera Asset Module VULNERABILITY CLASSES OF EXPOSED MUNICIPALITIES IN PACA REGION 27 27 Modelling of an EQ on the French Riviera Damage estimate Module Economic loss estimate = % damage X nb dwellings X surfaces X replacing cost/ m2 Estimate of the amount of damage to dwellings par municipality About 47 000 dwellings 9 G€ of insured dammage 28 28 Best practice exchange on flood zoning data by insurance markets B GK1 GK4 DE GK2 GK3 Insurance market proprietary zoning tools CZ Public zoning tools used by insurance markets http://geoinfo.lfrz.at/website/egisroot/services/ehora2/viewer.htm AU FR29 UK situation: EA agreement with ABI 30 ITALY : SIGRA project integrating site by site and portfolio tools 31 Qualitative assessment of risk awareness level High Low 32 EQ extended coverage: compulsory or not? 33 Market penetration of EQ coverage 34 Form of EQ insurance market organisation 35 EQ prevention requirements 36