Climate change is not a new concept. We are all aware of the consensus that our climate is changing, impacting the location, frequency and magnitude of floods and storms. But it’s still a relatively new area within the insurance industry.
It's also one that JBA has been working on for a number of years, which led me to presenting at the American Geophysical Union (AGU) Fall Meeting in Washington as JBA's Head of Research and Development. I presented ways to incorporate climate change data into tools for the insurance industry as part of one of the Global Floods sessions.
My presentation addressed three questions:
1) For the insurer whose predominant interest is understanding their risks over the forthcoming year, should they really be worried about the situation decades from now?
2) While climate change is widely considered a long-term problem, is there evidence that the impacts are materialising today?
3) As insurers begin to consider climate impacts in their short- and long-term views of flood risk, what information and tools are available to help them make better decisions?
Broadly speaking, JBA and our research collaborators are exploring two different ways to incorporate climate data into our client-facing tools:
1) Changing the hydrology and creating climate change hazard maps. We are currently working on two, separate, collaborative projects to develop climate change flood maps, using hydrology adjusted to account for different future climate scenarios. These projects are ongoing, and findings will be shared in due course.
2) Changing the event set and creating climate change catastrophe models. Some of this work, including collaborations with research groups, has been published in academic literature whilst our UK Climate Change Flood Model (based on a climate-adjusted event set) is fully operational and available to license. For further details and links to publications covering these projects, please refer to the following blog posts:
Greenhouse Gas Emissions Impacting Flood Risk
The Economic Impact of Climate Change in Canada
Catastrophe Modelling for the Future
During my presentation at the AGU, I shared some of the key results and messages from our climate change research. First, I talked about the work published in Kay et al. (2018). This study used thousands of climate model runs to represent the climate as it is now and as it could have been had no anthropogenic emissions occurred. Results from this study provided evidence that greenhouse gas emissions are likely to have increased the chance of occurrence of the flood at the centre of the study (GB winter 2013/2014, Thames basin), leading to an increase of up to 4,600 more properties being at risk. These results provide evidence that climate change has already had an impact on flood risk.
Second, looking to the future, I shared some of the highlights from JBA’s UK Climate Change Flood Model (incorporating a climate change event set). A key result from our work suggests that for UK residential properties, the average annual loss may increase by 25-30% by 2040. As the impact of climate change varies regionally, the model is an important tool for portfolio management on a regional scale as well as for assessing national-scale risk.
Third, using a similar approach, a University of Waterloo study (Thistlewaite et al. 2018) used climate data to adjust the event set within a catastrophe model. In Halifax, Nova Scotia, they found increases in loss of around 50% to be anticipated within a couple of decades. For insurers, these possible increases in loss should make them question their ability to cope with those changes.
The spatially variable nature and severity of climate change impacts highlighted in these studies shows the importance of working towards a better understanding of the potential impacts we may face in the future. Conferences like the AGU continue to provide an excellent platform for open discussions on what can be a controversial and challenging topic, but one that will continue to drive research for many years to come. JBA remain dedicated to exploring climate change and its potential impact on flood risk and the insurance industry, and to developing useable tools to help our clients manage future risks more successfully.
If you are interested in learning more about our collaborative climate change research, or how JBA can help you better understand climate impacts for your business, please get in touch.
