Defining and analyzing the frequency and severity of flood events to improve risk management from a reinsurance standpoint

Abstract

The National Flood Insurance Program (NFIP) debt has accelerated research into private flood insurance options. Offering this coverage begins with the ability to transfer the risk to the reinsurance market. Within the industry, perils such as hurricanes and earthquakes have standard definitions, but no such definition exists for floods. An event definition must examine the spatial and temporal aspects of the flood as well as the complexities of individual events. In this paper we were able to apply a data-driven methodology to capture and aggregate flood peaks into independent events. To aggregate flood peaks into independent events we needed to define what constituted a basin as our area of aggregation. The USGS utilizes the hydrological unit code (HUC) a 2- to 12-digit code that follows the Pfafsetter Coding System. The HUC code is used to identify varying levels of basin sizes ranging from region (2 digits) to subwatershed (12 digits). We chose to analyze both the HUC8 and HUC6, and a total of 7932 HUC8 events and 8444 HUC6 events were recorded during the 15 water years used in our study. Each event was characterized by duration, magnitude and severity. Focusing on the HUC8, events were unevenly distributed nationally while severity was relatively evenly distributed. The goal for our study was to take a method and be able to apply it to basins of varying characteristics. This framework relied on the ability to analyze the individual processes related to each individual basin.