THE ROLE OF INSURANCE FOR FLOOD RISK REDUCTION IN LONDON: AN AGENT BASED MODEL

APPROACH

Katie Jenkins, Jim Hall, Jan Dubbelboer – ECI, Oxford Swenja Surminski, Florence Crick - LSE

Igor Nikolic - TU Delft

London case study

• London has a relatively low standard of protection against

surface water flooding.

• Considered to be the most likely cause of flood events,

and probably the greatest short-term climate risk for

Greater London.

• Cost to England of £1.3bn - £2.2bn per year.

• Need for effective and economic options to deal with

present and future levels of surface water flood risk

• Public-private partnership between the UK government

and the insurance industry, known as the ‘Statement of

Principles’

• Need for continued, but redefined, public-private

partnership resulted in proposed Flood Re Scheme

Surface water flooding in the Borough of Camden, 2002

An agent based approach

• Useful for understanding systems and their behaviour, and visualising effects of

changing behaviour.

• Designed to address multiple research questions

• Developed around GIS data and incorporates probabilistic time series data on

surface water flood events

Example of

part of the user

interface and

visualisation

for London

Borough of

Camden

Simplified model overview

The ABM characterises different agents (people, insurer, government, developer, and Bank)

who interact within the environment.

Results: Affordability

The effect of Flood Re (dashed line) on the

average flood insurance premium over time

The effect of Flood Re (dashed line) on the

number of foreclosures of houses in flood risk

over time

Results: Flood Re design

The effect of including post-2009 homes in

Flood Re on the average flood insurance

premium

The effect of including post-2009 homes in

Flood Re on the % of flood risk homes in Flood

Re

Results: Flood protection measures

The effect of Flood Re and flood protection measures on

average flood risk over time

The effect of flood protection measures on the

percentage of houses re-insured into Flood Re over time

Summary

• Patterns of behaviour shown by the ABM are in line with literature, real world

data, and expert opinions

• Highlights potential benefits of flood protection measures in the form of reduced

damages and flood risk

• Demonstrates the potential role of the Flood Re scheme to make insurance

affordable

• Investigating how extensions and modifications to the proposed Flood Re

scheme could facilitate risk reduction, and the design - including options for the

transition to risk based pricing

• Investigating the additional role of government and developers in actively

incentivising risk reduction

http://www.enhanceproject.eu/