Assessing Flood Risk for the State of Florida

While hurricane winds are the primary natural hazard threat to Florida, flooding is nevertheless a significant hazard. Flooding can arise from a number of causes, not just from hurricanes. The private insurance market covers losses due to the hurricane wind hazard, but until recently flood losses, even if hurricane-related, were only insured by the federal National Flood Insurance Program (NFIP). Recently, the State of Florida has made legislative moves to open the flood risk market to private insurers. The insurance industry relies heavily on catastrophe models to assess hurricane wind risk. Florida is unique in that the State regulates hurricane wind hazard models used by residential property insurers for rate filings. The models must comply with standards adopted by the Florida Commission on Hurricane Loss Projection Methodology (FCHLPM). The Florida Legislature has recently directed the FCHLPM to develop standards for catastrophe models of flood risk in anticipation of increased participation of private insurers in the flood risk market. The FCHLPM has completed the creation of the flood standards and the standards are just now being published.

The Florida Public Hurricane Loss Model (FPHLM) is a catastrophe model for assessing risk of losses due to hurricane winds. The model is one of only five certified catastrophe models for hurricane wind hazard in Florida, and is the only non-commercial model that has been certified. The FPHLM is now undergoing a substantial upgrade to include flood risk for all types of events and comply with the new flood standards. In order to develop and validate the FPHLM for flood risk assessment, and to better understand the nature of flood risks in Florida, we have begun an extensive study of NFIP claims data to identify the meteorological cause of the flood losses. Flood losses can be caused by storm surge due to both tropical and non-tropical cyclones and heavy rain due to both tropical and non-tropical systems. The largest losses are due to storm surge during hurricane events, as expected. We will present a detailed breakdown of the losses due to various meteorological events.

The FPHLM has been funded through the Florida Legislature and is overseen by the Florida Office of Insurance Regulation (OIR). The model was developed by a consortium of universities and private consultants primarily located in Florida, but includes some partners outside of the state.