JBA Risk Management and FloodFlash have partnered to provide a breakthrough in event-based flood insurance, applying a parametric approach at property level. The product is claimed to be an industry first and will provide bespoke insurance for policyholders in frequently flooded areas who have traditionally struggled to obtain cover.
The innovation combines JBA’s UK 5m Flood Map and UK Flood Event Set with FloodFlash’s hardware, the FloodFlash sensor, to apply risk transfer approaches more commonly seen in large-scale transactions such as catastrophe bonds, to individual property and business owners.
Effective quantification of potential flood damage is critical to the FloodFlash approach and JBA’s UK 5m Flood Map allows water depths to be taken for each potential risk location at a range of return periods, at an individual building level. The maps cover river, surface water and coastal flood and take into account the impact of flood defences.
The FloodFlash sensor provides real-time flood depth reporting at property level more accurately and affordably than anything else on the market. FloodFlash uses this reporting to verify flood events for each individual policy and ensure that each premium quoted is entirely bespoke to the business it serves.
When the sensors are triggered by the flood depth agreed in the policy, the claim is verified and payment is made. This removes the time and uncertainty of loss-adjustment, meaning businesses can begin their recovery in days, rather than the months that traditional insurers often require to validate a claim.
Over half of UK small businesses in flood risk areas are currently operating with no flood cover because traditional forms of insurance are unaffordable or come with a large excess. Parametric insurance reduces the uncertainty in translating flood depth into financial loss by paying property owners a fixed amount as soon as flood water reaches a pre-agreed depth, subsequently reducing premiums.