Last week, Risks of Hazard explored a new way to view flood risk – Where, not When. The general concept was that floods are going to happen in the US every year, and underwriters should be more concerned with where the floods will cause damage, and not when the floods will come.

There is no place in the country that is a better illustration of this approach than Houston. Flood risk in Houston is managed by the NFIP in terms of the 100 year flood zones, and by Harris County with a 10 year flood zone. Data from the past 20 years suggests the right return period to consider is 2 months (96 days of flooding in 20 years). This is the extreme example of the futility of asking “How likely is it to flood this year”…in Houston, the answer is “100% probability it will flood in a given year”.

So, don’t ask “When?” -- ask “Where?”.

Using risk scoring based on geospatial analytics, it is possible to devise analytics that answer that question. We are working on this type of analytics for our InsitePro clients now – it will be exciting to see if these scoring analytics can help underwriters in areas like Harris County. 

Flood insurance in the US is undergoing significant innovation right now, so the analytics to support it need innovation, too. Not to mention new ways to think of flood risk.