Underwriting research
Lloyd's Lab report
How actionable flood alerts change the preventability, and the pricing, of flood losses in the Lloyd's market.
96% of observed flooding, forecast in advance.
As part of Previsico's participation in the Lloyd's Lab, we assessed real Lloyd's loss data to quantify the 'preventability' of flood losses when insureds receive an actionable alert. Previsico's forecasts correctly predicted 96% of flood events that occurred outside existing government warning areas during the 2019 South Yorkshire floods. Combining an alert with a flood plan and resilience measures cut modelled losses by 50% or more across household, fine art and commercial property use cases.
What an actionable alert changes.
South Yorkshire floods, 2019, 48 hours ahead of the event.
When an alert is combined with a flood plan and resilience measures.
Modelled against 2012 Superstorm Sandy loss data ($).
Full flood package: alert, plan and resilience measures.
A framework for pricing preventable flood risk.
Previsico's Lloyd's Lab work led to an underwriting framework with four options for mitigating flood risk: policy conditions tied to acting on an alert, no-claims bonuses, reduced premiums with an increased deductible or co-insurance, or providing the forecast itself as a value-added service. The aim is the same one that made fire a manageable, priced risk: reward the behaviour that prevents the loss.
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Get the complete Lloyd's Lab report: the underwriting framework, the Lloyd's loss data use cases, and the savings and costs tables, as a PDF.
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