Understanding flood risk

Initio is committed to providing transparent and accurate information to help you protect your property. Our use of flood data from Risk Management Solutions (RMS) allows us to better assess flood risks for properties across New Zealand. This guide explains how we use this data and what it means for you.

What is flood risk and how is it measured?

Flood risk is a combination of two key factors: the likelihood of flooding (frequency) and the potential impact of that flooding (severity). This complex subject involves various experts, including meteorologists, data scientists, and actuaries.

At Initio, we use flood risk data to determine whether we can provide immediate cover for a property or if we need to review the risk first. Our approach considers both the frequency and severity of potential flooding events.

Understanding flood risk information

When you get a quote, and the property you’re quoting is in a flood risk zone according to the RMS modeling, we will show you a message detailing what risk has been found. These are as follows:

• “Flood Risk – RMS Flood 50 Year Return”: There’s a 1 in 50 chance of a significant flood in any year, or a 2% chance of a flood occurring in any year.
• “Flood Risk – RMS Flood 30 Year Return”: This indicates a 1 in 30 chance of significant flooding each year, or a 3.3% chance of a flood occurring in any year.

These year values represent the scale of flooding that needs to occur for the water to reach this property. So when you hear about “one in a hundred year flood”, or “one in 50 year floods”, that is what those flood risks mean; if a “one in 30 year flood” occurs, water is likely to reach properties that fall in the RMS 30 Year flood model.

They don’t mean that a flood will only happen once in 100, 50, or 30 years, and multiple flood events can occur in quick succession, as we saw with the Auckland floods from 2023. Ultimately these are modeled risks, and real world outcomes may vary, but they are a way to better predict flood risks and keep insurance accessible for New Zealand.

Understanding flood layers

Flood layers are typically described in terms of their probability of occurring within a given year. However, it’s crucial to understand that frequency doesn’t always correlate directly with severity. Here’s how it works:

1. Frequency (e.g., 1 in 30 year, 1 in 50 year, 1 in 100 year floods)
   • A 1 in 30 year flood has a 3.3% chance of occurring in any given year
   • A 1 in 50 year flood has a 2% chance of occurring in any given year
   • A 1 in 100 year flood has a 1% chance of occurring in any given year
2. Severity (e.g., low, moderate, high, extreme)
   1. This indicates the potential impact or depth of flooding

It’s important to note that these factors can combine in various ways. For example:

• A 1 in 100 year flood (less frequent) could have low severity and minimal impact
• A 1 in 30 year flood (more frequent) could have extreme severity and cause significant damage

When you get a quote online, if there is a flood risk associated with the address you have provided we will display the risk found on the RMS dataset based on the location of the property.

Initio’s commitment to transparency

At Initio, we believe in empowering our customers with knowledge about their property risks. Our platform will show you the basic details of your property’s flood risk, including the flood layer it falls into. However, we want to emphasize that interpreting this data and managing risk is a complex process.

Factors that influence flood risk beyond frequency and severity include:

• Specific building location on the property
• Local topography
• Drainage systems
• Recent land developments

Due to these complexities, properties in higher risk categories often require individual review to accurately assess and manage their unique risks.

Who is RMS and how do they determine flood layers?

Risk Management Solutions (RMS) is a global leader in risk modeling and analytics. They use advanced technologies, scientific data, and sophisticated modeling techniques to assess natural disaster risks, including flooding.

RMS determines flood layers by analyzing:

• Historical flood data
• Topographical information (land elevation and shapes)
• River systems and water flow patterns
• Rainfall data and climate patterns
• Soil types and ground absorption rates
• Man-made structures like dams and levees

This comprehensive approach allows for a more accurate assessment of flood risk than traditional methods.

You can learn more about RMS here

Why might my council’s flood risk assessment differ from RMS data?

It’s possible that your local council’s flood risk assessment may differ from the RMS data we use. This can happen for several reasons:

1. Updated information: RMS may have access to more recent data or use more advanced modeling techniques.
2. Different focus: Council assessments might focus on specific local concerns, while RMS provides a standardized national assessment.
3. Varying methodologies: The methods used to assess flood risk can differ between organizations.
4. Broader considerations: RMS data may take into account factors beyond what local councils typically consider.

If you have concerns about discrepancies between council and RMS assessments, we encourage you to contact us for further clarification.

How does this affect my insurance?

At Initio, we use this flood risk data to:

1. Determine if we can provide immediate cover for your property.
2. Identify properties that may need further review before we can offer coverage.

Our goal is to ensure fair and accurate coverage for all our customers based on the most up-to-date risk assessments available.

What if I’ve made improvements to reduce flood risk on my property?

If you’ve taken steps to mitigate flood risk on your property, such as installing flood barriers or improving drainage systems, please let us know. We may be able to take these improvements into account when assessing your property’s flood risk.

Have more questions?

If you have any further questions about flood risk assessment or how it might affect your insurance, please contact our customer support team. We’re here to help you understand and manage your property’s risks.

Remember, understanding your flood risk is the first step in protecting your property. Stay informed and prepared!

IMPORTANT – RMS Moody’s disclaimer
This report, and the analyses, catastrophe modelling results and predictions contained herein (“Information”), are based on data provided by Initio Limited, and compiled using proprietary computer risk assessment technology of Moody’s Analytics, Inc. and its affiliates (“Moody’s”). This Information is a single copy, copyright protected work of Moody’s that contains confidential and proprietary information of Moody’s. As with any model of physical systems, particularly those with low frequencies of occurrence and potentially high severity outcomes, the actual losses from catastrophic events may differ from the results of simulation analyses. Furthermore, the accuracy of predictions depends largely on the accuracy and quality of the data used by Initio Limited. The Information is owned by Client or provided under license to Initio Limited and is either Client’s or Moody’s’ proprietary and confidential information and may not be shared with any third party without the prior written consent of both Initio Limited and Moody’s. Furthermore, this Information may only be used by the recipient in connection with, as applicable, (i) Initio Limited’s imminent placement of insurance or reinsurance; or (ii) the recipient’s 3 regulatory activities in relation to Initio Limited; and always for internal purposes only and for no other purpose, and may not be used under any circumstances in the development or calibration of any product or service offering that competes with Moody’s. You are not authorized to use, copy, modify, disclose, and/or distribute this Information in whole or in part in any form, except as expressly and specifically permitted under a written agreement signed by Moody’s. Any unauthorized use, copying, modification, disclosure, or distribution of this Information will constitute an infringement of Moody’s intellectual property and your agreement to pay list price for the use of the product or application associated with this Information, in addition to any applicable penalties or damages or other remedies available under applicable law. The recipient of this Information is further advised that Moody’s is not engaged in the insurance, reinsurance, or related industries, and that the Information provided is not intended to constitute professional advice. Moody’s including its parent, subsidiary and other affiliated companies are all beneficiaries of this disclaimer. MOODY’S (AND ITS PARENT, SUBSIDIARY AND OTHER AFFILIATED COMPANIES) SPECIFICALLY DISCLAIMS ANY AND ALL RESPONSIBILITIES, OBLIGATIONS AND LIABILITY WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THE INFORMATION OR USE THEREOF, INCLUDING ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL MOODY’S (OR ITS PARENT, SUBSIDIARY, OR OTHER AFFILIATED COMPANIES) BE LIABLE FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THE CONTENTS OF THIS INFORMATION OR USE THEREOF.