RMS Unveils Major Upgrade to its U.K. Inland Flood Model and Releases New Europe Earthquake Models

Newark, CA –  August 7, 2008 – Risk Management Solutions (RMS) today released a major new upgrade to its U.K. Inland Flood Model.  Using leading-edge technology, the upgraded model will enable all segments of the insurance industry to drill down to a finer level of detail than ever before, deepening their understanding of the impact of new and existing risks on their portfolios.

The RMS® U.K. Inland Flood Model – which was the first model of its type to be introduced to the market in 2001 – uniquely takes account of all causes of inland flood, including rivers and minor streams overflowing, as well as flash flooding resulting from excessive rainfall.  “Last summer’s U.K. floods were a dramatic and costly reminder of the need for a comprehensive view of flood risk,” commented Dr. Alice Stuart-Menteth, U.K. flood model manager at RMS. “Areas that were not deemed to be at risk by the Environment Agency were washed out by extreme rainfall which overwhelmed the drainage systems, resulting in an unexpected barrage of claims for those insurers that had not accounted for flash flood risk.”  Over 50% of the properties flooded were believed to be outside the major floodplain.

Supported by advanced mapping technology, the new RMS Inland Flood Model allows users to zone in on the flood risk for properties at street level, rather than just within a specific postcode.  As a result, it is possible to differentiate much more accurately between risks, so underwriters can select those that best meet their portfolio requirements. “With much richer data on street level flood risk, the new model can be used to a greater extent at the point of underwriting and to advance accumulation risk management practices,” added Dr. Stuart-Menteth.

All components of the model have been upgraded, and new features have been introduced. The model now includes a ‘continuous time-stepping’ approach, whereby the importance of previous rainfall and flood events on factors such as soil conditions - which played an important factor in the severity of last summer’s floods - is taken into account.  It also includes enhanced data on the status of flood defenses within the U.K., via the integration of the Environment Agency (EA) flood defense database, and can be used to analyze the impact of initiatives such as flood proofing a home to reduce flood risk.  “The Association of British Insurers is encouraging its members to introduce risk-related pricing to incentivize policyholders to implement flood risk reduction measures,” commented Dr. Stuart-Menteth.  “The new model equips them with the analytics to do this.”

Europe Earthquake Models
Together with the enhancements to its U.K. Inland Flood Model, RMS has launched a suite of new earthquake models for Europe, including France, Luxembourg, the Netherlands, Spain, and the U.K., and is upgrading its model for Portugal. These new additions will complement the existing earthquake models for Austria, Belgium, Germany, Italy, and Switzerland and provide a consistent framework for risk assessment in Europe, so users can make direct comparisons between countries and review risk on a region-wide basis.

“We’re bringing the latest earthquake modeling techniques to the countries of Western Europe, and enabling insurers and reinsurers to gain a complete picture of risk from all the major perils in the region,” said Dr. Andrew Sorby, Europe earthquake model manager at RMS.  “Earthquake risk across much of Western Europe is characterized by rare but potentially very damaging events. Many properties are vulnerable as they have not been made to withstand ground-shaking and the exposure is high.” 

The new suite of models – believed to be the most comprehensive of its type – will help insurers and reinsurers to gain a portfolio-level view of risk, and measure the potential impact of an extensive range of scenarios.  “Robust risk management always starts with awareness, and these new models help to complete the toolkit of information the insurance industry needs to confidently manage its exposures and make good risk management decisions,” said Dr. Sorby.

The U.K. Flood and European Earthquake models are being launched alongside a set of new and updated RMS catastrophe models and software with version 8.0 of the RiskLink® and RiskBrowser® modeling platforms that are used throughout the insurance and reinsurance industry.