Using a Coupled Hydrologic-Insurance Model to Examine Flood Policy Responses in an Era of Climate Change

Using a Coupled Hydrologic-Insurance Model to Examine Flood Policy Responses in an Era of Climate Change

Jason Thistlethwaite, Assistant Professor, University of Waterloo (2016-2017)

Using a Coupled Hydrologic-Insurance Model to Examine Flood Policy Responses in an Era of Climate Change


Changes in the intensity and frequency of storms and precipitation events are expected to aggravate flooding in municipalities across Canada. Adaptation challenges to reduce flood risk associated with climate change are primarily social, political, and economic. There is a growing concern that changes in hazard severity and frequency under climate change will erode the conditions necessary to offer insurance and the solvency of many insurers.

Flood policy in Canada is in a state of transition because of significant increase in flood damage costs over the last 10-15 years. In 2015, residential overland flood insurance became available for the first time. Integral to affordable and sustainable flood insurance in Canada are risk assessment tools that monetize potential damages to inform insurance markets, municipal planning and provincial-federal flood management and disaster assistance policy. A critical challenge for flood risk and insurance models is to incorporate the non-stationarity and uncertainty of climate change with existing flood risk mapping that is based on outdated probabilities.

Knowledge on the spatial and financial distribution of flood risk can help inform policy and planning to reduce community vulnerability. Municipalities play an integral role in implementing these policies and have a number of instruments at their disposal including bylaws, land-use and development charges, and incentive programs. Although these strategies have potential, their implementation is limited by the uncertainty associated with the spatial and financial distribution of flood risk under climate change and the benefits of flood resilience interventions.


This study will be the first known application of a state-of-the-art coupled hydrologic-flood insurance model to estimate property damage under climate change scenarios (both change in average annual losses and extreme event simulations). It explored the implications of differential policy pathways for the distribution of costs among property owners, insurers, and government (municipal, provincial and federal). The objective of this study is to integrate newly available high-resolution modeling knowledge on flood risk exposure with the newest scenarios on precipitation under different climate change scenarios to develop an integrated tool. Municipalities will be able to use the tool to assess their exposure to potential flood damage liabilities, assess the changing vulnerability of existing/new build developments, and examine the feasibility of flood damage projection strategies.

The research team will utilize Guy Carpenter & Company’s newly developed Canada Flood Model (CFM) which couples 4 modules that evaluate the exposure to fluvial floods and financial costs of a range of possible flood events. The CFM’s integration of a sophisticated understanding of physical flood risk with socio-economic impacts make it a powerful tool for decision makers in insurance.

The Intensity Duration Frequency (IDF) curve online tool developed by Dr. Slobodan Simonovic of Western University, and supported by Canadian Water Network will be incorporated into the CFM to assess the changes in flood risk. These IDF curves can be used to identify a set of stochastic events that replicate those corresponding to changes in the return-period of extreme precipitation. The CFM can then be used to identify the financial exposure of different stakeholders to flood damage in a municipality.

This integrated model of Canadian flood risk offers significant policy insights as well, and can serve as a knowledge mobilization tool to foster the improved coordination between governments and the private sector. Charlottetown, Prince Edward Island (PEI) has been selected as the case study because of the presence of three rivers and availability to leverage detailed climate change scenarios, climate-adjusted intensity-duration-frequency curves, sea level rise projections and storm surge mapping.


  • Development of a tool to couple hydrologic-insurance model with newly developed IDF curve tool.
  • Multi-stakeholder workshop, in conjunction with the City of Charlottetown, to present results of the tool, assess data gaps and gather feedback.
  • Presentations to end user groups and industry conferences
  • Collaborations with municipalities and insurance companies
  • Creation of a plain language report to disseminate findings


  • Informed decision-making for municipalities and insurance companies
  • Enhanced communication between municipalities and local residents, commercial businesses and others
  • Better understanding of the financial costs associated to natural disasters, the distribution of flood risk costs in Canadian society, and the return on investment associated with adaptation strategies
  • Reduced uncertainty associated with future flood risk
  • Increased understanding of the interaction of physical climate change impacts and social vulnerability

Research Team

  • Jason Thistlethwaite, Assistant Professor, University of Waterloo
  • Daniel Scott, Professor and University Research Chair, University of Waterloo and Director, Interdisciplinary Centre on Climate Change


  • Andrea Minano, Research Associate, University of Waterloo
  • Desmond Carroll, Vice President of Guy Carpenter Analytics, Manager of Canada Flood Model
  • Joseph Becker, Research Hydrologist, Guy Carpenter Analytics
  • The City of Charlottetown


Report pending

Project Advisors

  • Shawna Peddle, Director, Partners for Action
  • Blair Feltmate, Associate Professor, School of Environment, Enterprise and Development, University of Waterloo
  • Sarah Brown, Associate Director, Interdisciplinary Centre on Climate Change

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