Disasters spur investment in flood and fire risk tech

In 2023, when Storm Babet hit the town of Trowell in Nottinghamshire, Claire Snedden believed her home would be unaffected. After all, when she purchased the property in 2021, the estate agent told her that the flood that occurred the previous year, although it spread to the area, did not affect the house and was a once-in-a-lifetime event, and that flood prevention measures would be taken to protect the properties in the cul-de-sac. These assurances made her feel secure in her purchase.

However, two years later, Storm Babet swept across the UK, and after several days of rain, Ms. Snedden's home was flooded. She said, "We knew there would be standing water in the cul-de-sac, but no one thought indoor flooding would happen again. Yet, water poured into the house for five hours." The relentless nature of the storm overwhelmed the existing drainage systems.

"The water level reached the top of the skirting boards. We had to replace all the flooring, woodwork, and the lower kitchen, which took nearly 12 months." The final insurance bill was approximately £45,000. She said they were fortunate to qualify for a government scheme that provides affordable insurance for homeowners in high flood-risk areas. This financial assistance was crucial for their recovery.

Although she loves the area, her neighbors, and the house, the weather is now a source of stress for her. "We are always worried about the weather, if it rains for more than a few days, or if there is a named storm. We really wish more measures had been taken at the time to understand the risks. Surveys showed the property was in a medium flood zone, but there wasn't much detail beyond a flood zone map." This lack of detailed information left them vulnerable.

Climate change is increasing the likelihood and intensity of natural disasters such as floods, wildfires, and hurricanes. While it may be too late for Ms. Snedden and other homeowners, new tools are being developed to help people and companies assess climate risks. These tools aim to provide better insights and preparedness.

Last December, the UK Environment Agency updated its National Flood Risk Assessment (NaFRA), showing the current and future flood risk from rivers, seas, and surface water in England. It used its own data, as well as climate data from local authorities and the Met Office. It also updated the National Coastal Erosion Risk Map (NCERM). They were last updated in 2018 and 2017, respectively. These updates are crucial for understanding evolving risks.

The new NaFRA data shows that up to 6.3 million properties in England are in areas at risk of flooding from rivers, seas, or surface water, and this number could increase to around 8 million by 2050 as climate change progresses. Julie Foley, Head of Flood Risk Strategy at the Environment Agency, said, "Over the past few years, we have been transforming our understanding of flood and coastal erosion risk in England, using the best available data... and improved modeling and technological advances." This improved understanding is essential for effective mitigation.

"When we take into account the latest climate projections, a quarter of properties could be in areas at risk of flooding by the middle of this century." The Environment Agency plans to launch a portal where users can view their long-term flood risk. Scotland, Northern Ireland, and Wales also offer similar resources through the ABI. "We can no longer rely on historical data," said Lukky Ahmed, co-founder of Climate X. Predictive modeling is becoming increasingly important.

This London-based climate risk company provides a digital twin of the Earth, simulating different extreme weather events and their potential impact on properties, infrastructure, and assets under different emission scenarios. It combines artificial intelligence with physics-based climate models. He said, "While many climate models may tell you how much rainfall to expect, they don't say what will happen when the water hits the ground." Their approach offers a more comprehensive risk assessment.

"Our models simulate, for example, what happens when the water falls, where it flows, and what the impact of the flooding will be." While banks and other lenders are testing their products, real estate companies are currently using their services when considering new developments. Mr. Ahmed said, "They log into our platform and identify the location and existing building stock, and in return, they receive risk ratings and severity indicators related to hazards." This helps developers make informed decisions.

The weather in many parts of the world is far more extreme than in the UK. In January, devastating wildfires swept through parts of Los Angeles. Meanwhile, Hurricane Milton, which made landfall last October, could become one of the costliest hurricanes to hit western Florida. To help insurers manage these costs, New York-based Faura analyzes the resilience of homes and commercial buildings. These analyses are crucial for risk management in high-risk areas.

Valkyrie Holmes, co-founder of Faura, said, "We look at the different elements of a property to understand how likely it is to survive a disaster, and determine the property's resilience and survivability." He added, "We tell companies and homeowners whether their property will still be there after a disaster, not just whether a disaster will happen in an area." Faura's assessment is based on satellite and aerial imagery, as well as data from surveys and disaster reports. This multifaceted approach provides a comprehensive assessment.

Mr. Holmes said, "Technically, insurance companies have the ability to do this, but the models to quantify it have not been established." There are also services emerging for homebuyers. For the properties it sells, the American company Redfin estimates the percentage chance of natural disasters such as floods and wildfires occurring at each property over the next 30 years. This transparency helps buyers make informed decisions.

Redfin's chief economist, Daryl Fairweather, said, "If people are looking at two homes with the same layout in the same neighborhood, climate risk will determine their decision." As for Ms. Snedden, after experiencing it firsthand, she now works for The FPS Group, a flood risk company. Her personal experience gives her valuable insight into the issue.

She advises, "Flood risk is only going to get worse in the coming years, so it's essential to know as much as possible about a property's flood risk." "Flooding has a huge impact on communities and mental health. You should feel safe in your home, it shouldn't be a place of worry and anxiety." This highlights the importance of preparedness and mitigation efforts.