"There is little point in a consumer going to a cheaper insurance broker if they discover the specific coverage they need has been excluded. By using this model, everyone can make informed decisions."
GeoSmart Information's FloodSmart Analytics tool provides analysis for flood depths, probabilities and the costs of flooding from river, coastal, surface water and groundwater sources, including climate change impacts.
It says this will enable organisations across the financial services and insurance sectors to examine at even the most granular level the risk levels for buildings, which will result in better risk management decision-making.
FloodSmart Analytics is led by Phillip Martin, who brings more than 30 years’ insurance, reinsurance and finance experience to GeoSmart Information, which is a specialist in flood risk, drainage, groundwater and contaminated land.
He said increasing extreme weather events due to the climate emergency has highlighted a significant disparity between the long-term nature of property lending and the short-term nature of risk transfer through insurance, which is typically taken one year at a time.
Phillip said: “Historical experience can no longer provide an adequate data set for using quantitative statistical models, which are currently heavily relied on.
“Using inferior data will lead to sub-optimal decisions by insurers, mortgage lenders and risk analysts, so it makes sense to use the best available data.
“We’ve developed FloodSmart Analytics to enable property buyers and their lenders and insurers to establish the flood risk of a single property or a whole portfolio of assets so that decisions can be made as to the type of coverage that is necessary on insurance.
“There is little point in a consumer going to a cheaper insurance broker if they discover the specific coverage they need has been excluded. By using this model, everyone can make informed decisions.
“We believe FloodSmart Analytics is a game changer because it identifies a mismatch with a property and insurance cover and help the financial institutions to work with the property owner to ensure the insurance is adequate and appropriate.
“Climate change is a long-term issue in which risk financing and risk transfer methodologies are going to need common language to develop or adjust financial products, which is why FloodSmart Analytics is an important development.
“Because FloodSmart Analytics has resolution to a single building unit – or smaller – there is no loss of analytical function, even when combining very large portfolios because the detail is never lost.
“This means individual lending or insuring decisions can be tracked all the way to the risk management function and capital allocation decisions.”