Are We Doing Enough to Address Flood Risk?

2. 2Copyright © 2018 Risk Management Solutions, Inc. All Rights Reserved. May 17, 2018 AGENDA  The RMS U.S. Inland Flood Model  Flood risk and the 2017 hurricane season – Hurricane Irma – Hurricane Harvey  Flood vulnerability and mitigation  Takeaways

4. 4Copyright © 2018 Risk Management Solutions, Inc. All Rights Reserved. May 17, 2018Copyright © 2018 Risk Management Solutions, Inc.. • Flood is the most frequent U.S. Natural Disaster • Most U.S. counties are subject to flood risk yet may be outside FEMA zones • Most U.S. flood losses are under or uninsured • NFIP dominates residential market, commercial covered by private insurance The U.S. Flood Market

5. 5Copyright © 2018 Risk Management Solutions, Inc. All Rights Reserved. May 17, 2018Copyright © 2018 Risk Management Solutions, Inc. . OVERVIEW U.S. INLAND FLOOD MODEL Contiguous U.S. coverage  19m spatial resolution  Fluvial & pluvial  50,000 years of continuous hourly simulation  Explicit calibration to USGS flood depth data  Linked to tides  TC & non-TC, fully linked to N.A. Hurricane Model  Dynamic antecedent conditions  Detailed accounting for BFE/FFHs, basements  Stochastic disaggregation and full-fledged financial model (e.g., dynamic HC, per risk terms)

6. 6Copyright © 2018 Risk Management Solutions, Inc. All Rights Reserved. May 17, 2018 Precipitation Rainfall runoff Major river Minor river Riverine defenses Urban drainage Inundation Catastrophe Models Allow for Realistic Extrapolation to Extremes Time: 50,000 years, 1 hour resolution, ~1.1 million events Space: lower 48 states, 19m resolution

7. RMS U.S. INLAND FLOOD HD MODEL AT A GLANCE Some key differentiators • Explicit modeling of all major flood sub-perils - Tropical Cyclone rainfall - Non-Tropical rainfall events • Explicit flood protection scenarios (defended and undefended) • Validation leverages 25-year NFIP claims history • Robust vulnerability module • Benefits of HD technology

9. 9Copyright © 2018 Risk Management Solutions, Inc. All Rights Reserved. May 17, 2018Copyright © 2018 Risk Management Solutions, Inc.. Strongest storm that has ever existed in the Atlantic Substantial wind risk to entire Florida peninsula

10. 10Copyright © 2018 Risk Management Solutions, Inc. All Rights Reserved. May 17, 2018 MODELED STORM SURGE WITH NOAA TIDAL GAUGE PEAK STORM SURGE AND RMS RECONNAISSANCE OBSERVATIONS NAPLES MIAMI SAVANNAH

11. 11Copyright © 2018 Risk Management Solutions, Inc. All Rights Reserved. May 17, 2018Copyright © 2018 Risk Management Solutions, Inc.. RAINFALL ADDED TO ALREADY ELEVATED RIVER LEVELS BROKE RECORDS IN JACKSONVILLE

15. 15Copyright © 2018 Risk Management Solutions, Inc. All Rights Reserved. May 17, 2018Copyright © 2016 Risk Management Solutions, Inc..Copyright © 2017 Risk Management Solutions, Inc.. Houston Metro region inundated by relentless rainfall over an extended period

18. 18Copyright © 2018 Risk Management Solutions, Inc. All Rights Reserved. May 17, 2018Copyright © 2018 Risk Management Solutions, Inc. . Hurricane Katrina combined damage from wind and coastal storm surge: • Levy failures caused extensive flooding exacerbated by New Orleans elevation below sea level Hurricane Harvey combined damage from wind with all sources of flooding: • Storm surge • Fluvial (river flooding) • Pluvial (surface flooding) SURGE FLOOD WIND WIND + SURGE HARVEY KATRINA HARVEY RECONNAISSANCE SHOWS DAMAGE FOOTPRINT DOMINATED BY FLOOD HAZARD

20. 20Copyright © 2017 Risk Management Solutions, Inc. All Rights Reserved. May 17, 2018 2020Copyright © 2017 Risk Management Solutions, Inc. All Rights Reserved. May 17, 2018 FLOOD VULNERABILITY AND MITIGATION

21. 21Copyright © 2017 Risk Management Solutions, Inc. All Rights Reserved. May 17, 2018 Understand the contribution to damage from all sources of risk Updated wind model, including extra-tropical transitioning http://www.ibtimes.co.uk/japan-afterm ath-tsunam i-like-floods-that- left-least-3- dead-23-mis sing-photos -1519373 New comprehensive inland flood modeling approach Unique hydrodynamic storm surge model

22. 22Copyright © 2018 Risk Management Solutions, Inc. All Rights Reserved. May 17, 2018 CONSISTENT VULNERABILITY: INLAND FLOOD AND STORM SURGE  Basement vulnerability modeled explicitly  Foundation Type as secondary modifier  Users can override model default – Input First Floor Height or First Floor Elevation – Input Base Flood Elevation and/or Ground Elevation using Elevation Certificates – Input Foundation Type  If info unknown, pre-compiled First Floor Height or Elevation will be used – Varies by Foundation type, ZIP/State, FEMA zone Flood Depth (ft) FFH Foundation Pile Crawlspace Slab on grade Short Pier/Stem wall Structure Occupancy Number of stories Construction Basement

23. 23Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. May 17, 2018Copyright © 2015 Risk Management Solutions, Inc. . WHY ARE BASEMENTS IMPORTANT? • RMS underestimated commercial losses in Sandy flooding • Contents and BI dominated losses, particularly in NYC Basement Flooding & Resultant BI in Manhattan Source: RMS Field Recon HU Sandy Flooding 2012

25. 25Copyright © 2018 Risk Management Solutions, Inc. All Rights Reserved. May 17, 2018 SOME TAKEAWAYS  The RMS U.S. Inland Flood Model provides a robust and comprehensive view of flood risk to the (re)insurance and capital markets  The 2017 hurricane season demonstrated the importance of three sub-perils – Wind – Storm surge – Inland flood  Special data and modeling considerations are required to properly account for flood vulnerability and credits for mitigation  As interest around flood risk grows in the commercial market, detailed exposure data and robust modeling tools will become increasingly important to stakeholders combined flood risk

Are We Doing Enough to Address Flood Risk?

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Are We Doing Enough to Address Flood Risk?