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Roland NUSSBAUMManaging Director of Mission Risques Naturels (FR)

Chairman of Natural Hazards Working GroupComité Européen des Assurances (CEA)

“The International Catastrophic Risks Forum" Bucharest, October 1st 2007

Risk mapping and zoning approaches in European insurance markets

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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

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Typology of NATCAT extended coveragesin European insurance markets

Compulsory

Optionnal

Insurers are not risk carryer

**

*

New / modified extended coverages:

Recently put in place

In project………+

+

+Color intensity

according to market penetration of

extended cover:

FLOODS and/or

SEISMIC RISK

*

**+

*

*

**

*

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COMITE EUROPEEN DES ASSURANCES

o Federation of European insurance associations www.cea.assur.org

o Property Committeeo Natural Hazards Working Group (NH WG)

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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

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1. Users’ needs, data, services and scope of developments

French experience

Conducted by MRN

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Categories of needs within insurance

Evolution in France

Solvency II

CATNAT Regime

• Safety managmeent plan• Susbtainablity reportng duties for companies

Régime CATNAT

Offre outils modélisation

Solvency II

CATNAT

Evolution of ins. regime

Trends

Accumulation modelling

Site by site

scoring

Site by site scoring

modelling

Type of service

Portfolio exposure eval° and monitoring

Asset allocation

Prevention incentive

Risk exposure eval°

Prevention and crisis preparedness within insurance company

Risk accumulations

Reinsurance underwrinting

Rapid evaluation of total claim

Crisis management

Claims consistency control

Purpose

Statistics Acturarial sc.

Risk management

Real estate assets porforlio managment

Reinsurance cessions

Claims management

Underwriting

risk survey

Job

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Data, services and scope of use

Prevention policy

categories of dataScoring

Site by site

Exposure Assessment

Modelling Service /

General interest

Public policy

Competition

Private market players

Vulnerability

Loss records

Territories

Insurance portfolios

Private assets

Referentials

Underwriting

?

Hazards

scope

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2. Flood and seismic hazard zoning tools

General comments

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Flood and seismic hazard exposure

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Floods, storms and earthquakesAnnual probability of exceedance = f(losses)

Sources: DFNK, GFZ

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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 ENVSee Annex to CEA report

“Reducing the Social and Economic Impact ofClimate Change and Natural Catastrophes

Insurance Solutions and Public-Private Partnerships”July 2007

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Typology & evolution of flood hazard zoning tools on European insurance markets

(USA)

UK

FR : MRN 2004-7

Service Intranet

Market players with data modeling tools from

agencies market / project

Proprietary developments at market initiative

PPPs Hazard data

UK : Informal agreement

ABI(+CML) - EA

AU : PPP

VVO – LM

Public site

NFIP / FIRM

?

?

?

BE

2006

DE : ZURS 1 & 2

CZ : FRAT

AU : HORA

2007

IT : SIGRA

T

?

2004-6

Directives :

FLOODS

INSPIRE

PL : project

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2.2. Seismic risk in European insurance markets

First results of enquiries

and best practices exchanges

between CEA Member Associations

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Seismic riskAvailability of hazard maps

?

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seismic hazard information availability

Source : B. Ranguelov, Bulgarian Academy of Sciences , at SENS’2006, June 2006

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SEISMIC ZONES FROM 2004 (3 ZONES)

G R E E C E

II

BREAKDOWN OF EXISTING PROPERTIES WITHIN THE COUNTRYBREAKDOWN OF EXISTING PROPERTIES WITHIN THE COUNTRY

I

II

III

71,2%

27,0%

1,8%

Exposed properties per seismic zone

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Seismic riskAvailability of PML scenarios

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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

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www.cea.assur.org

www.mrn-gpsa.org

roland.nussbaum@mrn.gpsa.fr

Thank you for your attention

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Annexes to the presentation

Additionnal maps and illustrative examples

Risk mapping and zoning approaches in Europe

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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 approvedassets + adequacy

PPR matureassets +

adequacy + efficiency

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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

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This example shows a consultation of the information available for flood and subsidence hazards at the following adress:

1 rue Bannier 45 000 Orléans

The MRN geoservices intranet platform

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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

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Modelling of an EQ on the French Riviera

synthetic eventsynthetic event

Magnitude 6.1 Magnitude 6.1

Epicenter:Epicenter:

in the sea, in the sea,

near Menton citynear Menton city

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Modelling of an EQ on the French Riviera

VULNERABILITY CLASSES OF EXPOSED MUNICIPALITIES IN PACA REGION

Asset ModuleAsset Module

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Damage estimate ModuleDamage estimate Module

Modelling of an EQ on the French Riviera

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

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Best practice exchange on flood zoning data by insurance markets

AU

http://geoinfo.lfrz.at/website/egisroot/services/ehora2/viewer.htm

FR

Public zoning tools used by insurance markets

GK1

GK4

GK3GK2

B

DEInsurance market proprietary zoning tools CZ

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UK situation: EA agreement with ABI

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ITALY : SIGRA projectintegrating site by site and portfolio tools

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High

Low

Qualitative assessment of risk awareness level

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EQ extended coverage: compulsory or not?

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Market penetration of EQ coverage

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Form of EQ insurance market organisation

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EQ prevention requirements