Flood Risk and Critical Infrastructure: How Can Munich Re Help?

The recent failure of the century-old Rapidan Dam in Minnesota has once again brought the critical issue of flood risk to the forefront from an infrastructure and vulnerability perspective. This catastrophic event, triggered by unprecedented rainfall in the region, highlighted the risk our communities face in a new climate regime and aging infrastructure.

Extreme weather events are becoming increasingly common in our changing climate. Warm air holds more moisture, leading to higher precipitation levels and, consequently, more frequent and severe flooding. The failure of the Michigan dams in 2020, also due to extreme precipitation, underscores this growing trend.

Flooding imposes a significant economic burden on the United States. According to the Joint Economic Committee, the annual cost from flooding ranges between $179.8 billion to $496 billion.?? The same report indicates that the infrastructure upgrades needed to protect against flooding is between $68.9 billion and $344 billion.?This immense financial impact underscores the need for comprehensive flood risk management strategies.? While relevant agencies and authorities are working on updating the relevant/critical infrastructure, it is important that property owners understand their risk.? Insurance companies play a pivotal role in communicating and managing flood risk by leveraging the latest climate science and sophisticated data analytics. By analyzing data from the National Inventory of Dams,?Munich Re US scientists and data analysts were able to assess the vulnerability of these critical infrastructures. Our team developed a proprietary scoring system to identify high-risk dams. Of the 1000+ dams identified and averaging 100 years old, 13 were found to be at the highest risk of failure, including the Rapidan Dam.

Understanding flood risk is crucial for enhancing community resilience. While analytics help quantify exposure, providing tailored insurance products is equally important.? In partnership with our insurance clients, Munich Re US offers a low-limit flood endorsement for homeowners in low to moderate-risk flood zones, promoting a proactive approach to resilience.? Flood risk is a multifaceted issue that requires a comprehensive approach, combining advanced analytics with proactive insurance solutions. By understanding and addressing the vulnerabilities of critical infrastructure, we can better prepare for future flood events and enhance the resilience of our communities.

Reach out to our team to discuss more about analytics and insurance solutions in a changing climate risk landscape. Resilience for us means “fall forward,” not “fall back.”

?