Risk Management Solutions, Inc. (RMS), a provider of products and services for catastrophe risk management, has released an in-depth study, revealing the costs to the U.K. insurance industry if an event were to occur today, similar to the catastrophic event of the 1953 floods.
The published study is available on RMS’ corporate web site, (http://www.rms.com), effective Jan. 31, to mark the 50th anniversary of one of the worst natural disasters to occur in northern Europe in more than 200 years.
RMS has performed a detailed reconstruction of the 1953 U.K. East coast storm surge flood, using the latest high-resolution digital topographic data. A repeat of the ‘flood footprint,’ with the same areas being flooded to the same depths as in the 1953 event would give a total insured property loss of over 7bn pounds in 2003.
However, this is a ‘virtual loss,’ as major improvements in the quality of the sea-defenses have significantly reduced the areas that would be flooded. To find the true loss for today, RMS has used its proprietary RMS(TM) U.K. Storm Surge flood catastrophe analysis technology to simulate repeats of the 1953 storm surge arriving at a range of tidal heights, and taking into account the predicted behavior of each section of improved sea-defenses. The analysis showed a mean insured property loss of 580m pounds from a set of around 50 simulations.
The material cost of the damage in the U.K. was estimated at the time of the floods in 1953 to be 40-50m pounds, which adjusted for inflation would be approximately 1bn pounds today. Yet since 1953 the number of properties and their value has increased significantly within the coastal floodplains, and flood is now a standard coverage in U.K. residential and commercial insurance policies.
The flooding in 1953 was the result of a combination of an intense low-pressure weather system moving to the south-east over the North Sea and a high tide, which created a powerful storm surge, sweeping southwards to overwhelm flood defenses along the east coast of the U.K. and the south-western Netherlands.
More than 300 people drowned, 24,000 houses were flooded and 500 destroyed along the coast of Eastern England while in the Netherlands, there were over 1,800 fatalities with more than 47,000 properties flooded and 9,000 destroyed.
The extensive damage and casualties revealed the inadequacy of coastal defenses and led to major programs of improvement in both countries, including the construction of the Thames Flood Barrier near Woolwich, which became operational in 1982.
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