Realistic storm surge scenarios for UK (re)insurers

The UK has experienced several coastal floods over the last century, which have threatened the society and the (re)insurance industry. The Winter of 2013/2014 was especially notable, in that several events have largely affected many different areas in England as 50 defence breaches occurred. Thus, simulating credible scenarios, capable of capturing the likelihood of coastal flood events arising at different locations during the same storm and modelling the impact of breaching of defence, is crucial to both disaster management planning as well as the insurance industry. In this study, which was carried out jointly by the Gallagher Research Centre and the research partner HR Wallingford (HRW), two extreme but realistic UK storm surge scenarios were developed separately for the East and West coasts of UK. The scenarios explore simultaneous flooding along extended coastline and the impact of realistic defence breaching, both in the present day and in 2050. A high-resolution footprint for each scenario run (present day non-breach, present day breach, future non-breach, and future breach) was generated by means of a 2D hydrodynamic model run on a 5m LiDAR Digital Elevation Model. Flood breaching was based on a national set of fragility curves created by HRW’s defence model. To account for climate change, the UKCP6 (UK climate projections) were used to assign the projected RCP 4.5 surge estimates for 2050. Finally, the loss potential for each simulated footprint was estimated for Gallagher Re’s insured market portfolio. Among the major findings of the analysis, it is shown how defence breaching has a significant impact on the potential loss, particularly for the East coast scenario, for which it results in a 10x increase in the number of properties affected. Climate change has also two impacts, on the number of properties flooded, but also on the depth of flooding experienced by properties already at risk, further exacerbating the potential loss. Finally, it is shown how these Realistic Disaster Scenarios are supporting UK (re)insurers in helping stress test their exposure to storm surge, while helping build a robust view of risk.