3.2 ASSESSABILITY ...

2.3.2  Assessability  

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In the Netherlands the proportion of property at risk of flooding is between 60% and 70%.

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Expected flood losses must be assessable in terms of the total value of assets that are insured in the

risk area i.e. the potential losses and an estimate of the frequency of a flood occurring. This information

is used to determine the insurance contract’s terms and conditions under which the policy will operate.

In most developed countries, underwriters assess floods using flood modeling tools and other statistical

techniques. As with other categories of natural disaster insurance, because probabilities are low and

historical data often missing, flood losses are very difficult to estimate. Modern catastrophe scenario

planning tools are getting better, but many countries still do not have comprehensive flood models due

to the high cost of development. A comprehensive national flood model is a prerequisite for insurers to

calculate accurate risk premiums and to be able to balance their risk portfolios.