Aon Benfield, the global reinsurance intermediary and capital advisor of Aon Corporation, has launched the first storm surge model for Germany to help reinsurers quantify risk in this underdeveloped line of cover.
To date, storm surge has generally not been included in German buildings policies due to reinsurers’ inability to accurately assess the peril.
However, the new model, developed by Impact Forecasting, Aon Benfield’s catastrophe model center of excellence, will help firms to define their individual and aggregated exposures across the EUR300bn of structures at risk.
The model analyses such variables as storm frequency, wind speed, tidal movements, wave height, and the efficacy of Germany’s current coastal defence systems.
History has shown the devastating effects of storm surge on the region – the 1962 North Sea Flood resulted in a storm surge that caused around DM750m of damage to Hamburg. A similar event today would be far more costly given the increases in value and density of buildings and infrastructure.
Jan-Oliver Thofern, Chief Executive Officer of Aon Benfield Germany, said: "By generating thousands of stochastic scenarios, this new storm surge model quantifies re/insurers’ exposures and potential claims burden, making the potential danger highly transparent. The model will help creating new opportunities to drive the market, providing re/insurance protection for local business and residents who may have been at risk from a storm surge event.”