A service to help insurers understand the financial impacts of changing flood risk in Europe, based on PESETA IV

The European Union PESETA IV project has produced a comprehensive dataset that quantifies the impact of climate change on river flooding and damage in Europe. This data potentially has significant application in the insurance industry, but requires some steps of post-processing, and appropriate delivery mechanisms, before it can be used in practice. The post-processing approach we apply involves statistical modelling of the simulated changes in damage to estimate rates of change of log damage versus global mean surface temperature (GMST). Under linear assumptions, these rates of change can be used to calculate the change in damage between any two time-periods for any GMST scenario. Under further assumptions, these changes can be used to adjust many of the metrics of flood risk used in the insurance industry, such as average annual losses, exceedance probabilities and year loss tables. We deliver these results in two ways to suit different users in the insurance industry. First, the rates of change, and related correlations, are provided as freely available datasets for insurers who prefer to process and apply the data themselves. Second, commercial online software is provided that performs some steps of the processing and application. Many sources of uncertainty affect our results. The results must not therefore be interpreted too literally, but hopefully give a good indication of the sign and rough magnitude of the likely changes in river flood damage due to climate change. Future studies will hopefully reduce the uncertainty.