Reinsurer Swiss Re and Czech technology company MultiMedia Computer (MMC) have teamed up to develop a flood risk assessment tool for the Czech insurance market.According to Swiss Re, the joint venture is a response to the severe flooding in the Czech Republic in recent years. It is designed to enhance existing flood risk information and to complement the ongoing efforts of the Czech Insurance Association (CAP) and its member companies to promote improvements in this area.
Swiss Re is a developer of catastrophe risk models, and MMC is a technology provider in the Czech Republic for geographic information systems services. The new CD-ROM-based tool, which the two parties began to develop in 2002, allows Czech insurers to apply flood risk assessment techniques to the underwriting process.
Underwriters, risk managers or insurance agents can use the system to select, assess and underwrite a real estate property according to its flood risk exposure, said the companies, adding that the result of the initiative will be better flood risk management and improved risk transfer in the Czech Republic.
Ivo Menzinger, head of Natural Perils at Swiss Re in Munich, said: "The tool enables direct insurers to enter precise data on the location of a property, ie, house number, street and city. Or they can analyse properties at a less detailed level, looking, for example, at an entire village.
"The location data entered is transformed into geographic co-ordinates, which are used for a so-called 'zoning analysis'. The output determines the flood risk level, which in turn can be used to calculate risk-adequate premiums."
During the 2002 floods in Europe, some 200,000 Czech residents were evacuated. Insured losses in the Czech Republic amounted to €1.2 billion compared with an economic loss of €2.3 billion. Europe as a whole suffered an economic loss of €15 billion.
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