First American launches flood catastrophe model in U.S., explores Canadian opportunities

First American Corporation (NYSE: FAF), in partnership with Swiss Re, has launched a flood catastrophe model for the U.S. market that is designed to allow insurers to measure flood exposures at the portfolio, policy and property level.First American Corporation confirmed they are exploring opportunities to develop a similar flood risk model for the Canadian market. The U.S. model includes geospatial analytics, basic flood data, flood risk scoring and near real-time monitoring of actual flood conditions, a First American release says.It also takes into account riverine and coastal flooding hazards throughout the continental United States. It is based on a combination of hydraulic science and historical flood events, and reports probable maximum loss to average annual loss and key return period losses.”Many insurers and reinsurers choose not to proactively underwrite this specific peril because they lack the tools to accurately measure and manage flood risk in the U.S.,” the company noted in a statement. Overland flooding is not underwritten in Canada, and research by the Institute for Catastrophic Loss Reduction (ICLR) notes it is the least understood type of loss by policyholders. A survey by the ICLR found that 70% of respondents falsely believed they were covered for overland flooding.Kathy Bardswick, president and CEO of The Co-Operators, noted in the February issue of Canadian Underwriter that surprises to homeowners like this might potentially lead to increased animosity and distrust of the industry as a whole.”Storms are a time for insurance companies to prove their worth,” she wrote. “Too often we cannot do so, either because we increasingly don’t write certain risks in a particular area or because of policy exclusions. It’s not uncommon to see a third of all claims denied following major water-related events.”