Association of British Insurers Uses RMS Model as Basis for New U.K. Flood Recommendations

New ABI Study Analyzes the Effects of Rising Sea Levels on Flood Risk in Eastern England
 

Newark, Calif. – November 9, 2006 –  Risk Management Solutions (RMS), the world’s leading provider of products and services for the management of catastrophe risk, today announced that the Association of British Insurers (ABI) has released new findings and recommendations on managing flood risk on the east coast of England, based on RMS analyses and modeling.

The study used the RMS U.K. storm surge catastrophe model to examine the current and future impacts of coastal flooding along the east coast of England, focused on five case study areas: Kingston-upon-Hull, Great Yarmouth and Lowestoft, Canvey Island and Southend, East London, and Hastings.

For this study, three storm surge scenarios were identified from the many hundreds of events in the RMS stochastic model representing surges with a 200-250 year return period for different sections of the coastline. One of the three was a close match to the surge that caused the great flood of January 31/February 1, 1953 when more than 2,000 people were drowned in eastern England and the Netherlands. More than 100 simulations were run for each surge, to sample the full range of surge outcomes, from storms arriving at low tide with well-performing flood defenses, to storms arriving at high tide with poorly-performing flood defenses. RMS also increased the mean sea levels by 0.1, 0.2, and 0.4 meters at all reference locations in order to assess the effects of the anticipated rise in sea levels. The exposures and vulnerabilities employed in the simulations were those of the standard RMS model.

The RMS analysis led to several major conclusions, including:

• Assuming today’s building exposure remains constant, the number of properties at risk of flooding in eastern England rises from 270,000 to 404,000 if there is a future 0.4-meter rise in sea levels. However, investment now in improvements to coastal flood defenses could reduce the number of properties at risk from 270,000 to 170,000; a 0.4-meter rise in sea levels would then increase this to 287,400 properties, roughly the same as today.

• Assuming current level of flood defenses are not improved, the financial cost of one of the ‘1953 type’ storm surge scenarios would rise by around 150% to between £7.5 billion and £16 billion (for current exposure and values) with a sea level rise of 0.4 meters. The ABI study showed that maintaining levels of risk comparable with those today would cost £3.7-4.6 billion in improving defenses and flood risk management.

“The recent publication of the Stern report on the Economics of Climate Change has shown how the costs of future risk need to inform today’s economic decisions,” said Dr. Robert Muir-Wood, Chief Research Officer at RMS. “Catastrophe models are the appropriate tools for exploring the costs of some of the key risks of Climate Change, in particular in the coastal zone, so as to identify and optimize alternative paths of adaptation.”

The ABI has put forward several recommendations to the British government based on the recent study, including increased spending on coastal flood defenses and in the Thames estuary as well as changes in regional planning guidelines to account for long-term flood risk. ABI's website can be accessed at www.abi.org.uk

About ABI

The Association of British Insurers is the trade association representing insurers writing 94% of the domestic insurance business in the United Kingdom, the world's third largest insurance market. The ABI has been active in investigating climate change issues for over a decade, including research published in June 2005 on the likely costs of damage arising from hurricanes in the US, typhoons in Japan and winter windstorm in Europe, following climate change. The ABI's objective is to ensure public policy decisions enable customers and communities to continue to prosper through appropriate risk management, including measures to mitigate further climate change and to adapt to the already inevitable climate change over the next several decades.