Willis Re Launches Flood Model for MENA Region

Willis Re has launched a new flood model for the Middle East and North Africa (MENA) region, which enables re/insurers to quantify their flood risk using a catastrophe model.

Currently the model covers Morocco, the United Arab Emirates, and the Kingdom of Saudi Arabia, with further releases for Oman, Qatar and Egypt during the third and fourth quarter of 2021.

This model was developed through the collaboration of Willis Re’s in-house peril experts with leading flood specialists, KatRisk, and resources from the Willis Research Network (WRN).

The latest flood hazard layers and loss aggregation methodologies are used to generate location level losses as well as portfolio outputs for a 50,000-year simulation period.

The main business applications of the MENA flood cat model include:

• Structuring and pricing reinsurance layers for purchasing suitable protection
• Assessing capital adequacy and responding to regulatory solvency requirements
• Portfolio management and optimisation
• Responding to rating agency requests

Floods are relatively common in the MENA region, said Willis Re, noting that damage from floods can come from pluvial and fluvial flooding (flooding from rainfall or rivers).

Fluvial flooding is more predictable due to proximity to river networks, while pluvial flooding is more unpredictable due to the arid desert environment, which, after intense rainfall, may cause runoff and flash floods, particularly in urban areas where the soil is covered by impermeable man-made surfaces.

This combined with Wadis (dry riverbeds) channels water after intense precipitation and causes unpredictable and localised flooding. These flood events have the capability to cause important economic and insured losses.

Such floods are likely to impact the lower return periods of the exceedance probability curve, therefore impacting re/insurers profitability and making it more and more vital for re/insurers to mitigate this profit volatility by modeling the risk.

“We are extremely pleased to announce the addition of the MENA flood model to our toolkit. Continued commitment to our clients and the region requires us to enhance our capabilities relating to the more tangible and frequently observed perils,” commented Natalie van de Coolwijk, chief executive officer, Middle East and Africa.

“These capabilities will only become more relevant as the landscape evolves and the effects of climate change become more apparent,” van de Coolwijk added.

“Building a more robust view of risk for perils such as flood means we can tailor fit-for-future reinsurance programmes for our clients and more scientifically quantify impact on claims and reinsurance costs,” she said. “Being able to give clients more comfort and certainty around reinsurance cover and costs is at the core of our purpose, ultimately contributing towards a better protected and more resilient insurance industry.”

Topics Flood New Markets Willis Towers Watson