Phillip Martin (left) and Paul Ellis, of GeoSmart Information

A leading UK environmental consultancy has launched a new product that will enable insurers, risk managers and mortgage lenders to accurately assess flood risk at even single building level.

GeoSmart Information, based in Shrewsbury, Shropshire, says FloodSmart Analytics provides high-definition analysis for flood depths, probabilities and the costs of flooding from river, coastal, surface water and groundwater sources, including climate change impacts.

It says this will enable organisations across the financial services and insurance sectors to examine at even the most granular level the risk levels for buildings, which will result in better risk management decision-making.

FloodSmart Analytics is led by Phillip Martin, who brings more than 30 years’ insurance, reinsurance and finance experience to GeoSmart Information, which is a specialist in flood risk, drainage, groundwater and contaminated land.

He said increasing extreme weather events due to the climate emergency has highlighted a significant disparity between the long-term nature of property lending, which is typically 25 years for a domestic mortgage, and the short-term nature of risk transfer through insurance, which is typically taken one year at a time.

“Historical experience can no longer provide an adequate data set for using quantitative statistical models, which are currently heavily relied on,” said Phillip.

“Using inferior data will lead to sub-optimal decisions by insurers, mortgage lenders and risk analysts, so it makes sense to use the best available data.

“We’ve developed FloodSmart Analytics to enable property buyers and their lenders and insurers to establish the flood risk of a single property or a whole portfolio of assets so that decisions can be made as to the type of coverage that is necessary on insurance.

“There is little point in a consumer going to a cheaper insurance broker if they discover the specific coverage they need has been excluded. By using this model, everyone can make informed decisions.

“We believe FloodSmart Analytics is a game changer because it identifies a mismatch with a property and insurance cover and help the financial institutions to work with the property owner to ensure the insurance is adequate and appropriate.”

Over the past eight years, GeoSmart, which counts insurance providers, lawyers, local authorities and property developers among its customers, has been developing its world-leading groundwater flood risk mapping and broader flood risk capabilities.

Its new FloodSmart research and development programme supplements its work of delivering real time groundwater data and daily groundwater flood forecasts to the National Flood Forecast Centre and water companies and integrating risk data for all sources of flooding to provide holistic risk assessment.

FloodSmart Analytics offers a much-needed alternative approach to statistical risk models and focuses on bringing GeoSmart’s already proven capability to the finance sector, said Phillip.

“Climate change is a long-term issue in which risk financing and risk transfer methodologies are going to need common language to develop or adjust financial products, which is why FloodSmart Analytics is an important development,” he added.

GeoSmart’s technical expertise has enabled it to significantly enhance data quality and integration with other flood initiatives. This analytical capability enables the building, finance and insurance sectors to more accurately calculate the risk and cost of flooding.

“Because FloodSmart Analytics has resolution to a single building unit – or smaller – there is no loss of analytical function, even when combining very large portfolios because the detail is never lost,” said Phillip.

“This means individual lending or insuring decisions can be tracked all the way to the risk management function and capital allocation decisions.”

GeoSmart’s data is already relied on by multiple sectors, from millions of home-owners to corporate entities and public sector operators, and the data have supported research by the Climate Change Committee (CCC), the UK’s independent adviser on tackling climate change.