Designing representative European storm surge scenarios for insurance risk assessment: challenges, results, and limitations

Storm surge, a coastal flooding phenomenon driven by high-speed winds pushing water onshore poses a significant natural hazard across the globe. In recent decades, Europe has experienced several destructive extratropical cyclones that have severely impacted coastal communities and economies, such as Eunice (2022), David (2018), or Xaver (2013). Storm Xynthia in 2010 was especially notable, with substantial fatalities and material losses in France, highlighting the need for accurate storm surge risk assessment for societies and the (re)insurance industry involved. Yet, current modelling solutions are limited. Main commercial models only provide partial coverage of the risk in Europe, with a primary focus on the United Kingdom. To address this gap, AXA proposes a scenario-based approach to assess storm surge risk across North-Western Europe. Using the SCHISM 2D hydrodynamic model, we reproduced 10 significant historical events notably affecting France, Germany, and the United Kingdom, then perturbed them along three parameters: wind speeds, storm sizes and tide timings, generating 480 scenarios. The study presents the challenges of scenario selection and variability representation. It further provides findings on the modelling results by parameter and country, and on the estimation of the loss potential using a representative North-Western Europe insured market portfolio. Finally, key limitations are discussed, related to unmodelled defences and Digital Elevation Model accuracy. The approach provides valuable insights for AXA’s risk assessment and is a crucial step towards building a robust understanding of our risk.