Willis Re has launched a new flood model for the Middle East and North Africa (MENA) region, which allows reinsurers to quantify their flood risk using a disaster model.
Currently, the model covers Morocco, the United Arab Emirates, and the Kingdom of Saudi Arabia, with further releases for Oman, Qatar, and Egypt in the third and fourth quarters of 2021.
This model was developed through collaboration of internal experts at risk from Willis Re with leading flood specialists, KatRisk, and resources from the Willis Research Network (WRN).
The final flood risk layers and loss aggregation methodologies are used to generate location level losses as well as portfolio results for a 50,000 year simulation period.
The main commercial applications of the MENA flood cat model include:
- Structuring and pricing of reinsurance layers for the purchase of appropriate protection
- Assess capital adequacy and meet regulatory solvency requirements
- Portfolio management and optimization
- Respond to requests from rating agencies
Flooding is relatively common in the MENA region, said Willis Re, noting that flood damage can come from rain and river flooding (flooding caused by precipitation or rivers).
Riverine flooding is more predictable due to the proximity of river systems, while storm flooding is more unpredictable due to the arid desert environment, which after intense rainfall can cause runoff and flash floods, especially in urban areas where the ground is covered by impermeable man. -surfaces made.
This, combined with wadis (dry river beds), channels water after intense rainfall and causes unpredictable and localized flooding. These floods have the capacity to cause significant economic and insured losses.
Such flooding is likely to have an impact on the lower return periods of the overshoot probability curve, thus impacting the profitability of re / insurers and making it increasingly vital for re / insurers to mitigate this volatility of prices. benefits by modeling risk.
“We are extremely happy to announce the addition of the MENA flood model to our toolkit. The continued commitment to our customers and to the region requires us to improve our capabilities relating to the most tangible and frequently observed perils, ”commented Natalie van de Coolwijk, Managing Director, Middle East and Africa.
“These capabilities will only become more relevant as the landscape changes and the effects of climate change become more apparent,” van de Coolwijk added.
“Building a more solid view of the risk of risks such as floods means that we can tailor future-oriented reinsurance programs for our clients and more scientifically quantify the impact on claims and reinsurance costs”, a- she declared. “Being able to give clients more comfort and certainty about coverage and reinsurance costs is at the heart of our goal, ultimately contributing to a better protected and more resilient insurance industry. “