PUBLICATIONS

Expert opinion: Seine river floods in the Ile-de-France region

Historical analysis of the flood of 1910 Modelling reference scenarios

03/01/2016

In France, the vast majority of insurance claims filed after floods is managed by a compensation system with initial responsibility by insurers in the framework of the Natural Disasters Scheme. This was instituted by law No. 82-600 of July 13, 1982 that provided for a compulsory extension of coverage on all property damage policies to insure against natural disasters. This extension is financed by an ‘additional premium’ or ‘surcharge’. The rates applied do not depend on exposure to the natural disaster risks insured, but rather involve national "solidarity": the costs to every policy holder are augmented by the same supplementary premium. Similarly, the Natural Disasters Scheme enables the Caisse Centrale de Réassurance/State Reinsurance Company (CCR), a company 100% state-owned and controlled, with all state guarantees, to propose unlimited reinsurance coverage for natural disasters, in particular floods.
The pivotal role of the CCR in this compensation scheme requires assessing the exposure of French land to natural disasters and contributing to their prevention by circulating relevant information consistent with the objectives assigned to the CCR by the State. The CCR has therefore developed modelling tools to estimate the cost of an event several days after it occurs in order to:
- establish provisions and financial reserves to constitute a "shock absorber";
- inform its stakeholder (the State) and insurance companies that are reinsured by the CCR (ceding companies).
Nevertheless, if only recent historic events covered by the Natural Disasters Scheme are analysed, the assessment of the financial exposure of the State, the CCR, insurance companies and insured parties is incomplete. This is because a large number of possible events not yet having occurred need to be taken into consideration.
Among the most noteworthy events in terms of financial exposure for the insurance sector, the flood of the Seine in Paris in 1910 is often used as a reference. This involved the most heavily populated region of France (about 18.8% of the population lived in Ile-de-France) and also the most industrialised region (about 22% of insured business risks were located in Ile-de-France).
This report consists of two parts: the first describes the event of January 1910 in the conditions existing at the time. The analysis of published information, the loss and damage descriptions reported at the time and the chronology of events have enabled the event to be placed in its context in terms of vulnerability and exposure to floods. The second part describes the simulation of several flood scenarios using the deterministic flood model developed by the CCR: 1) a scenario involving flow of the Seine equivalent to that of 1910, 2) a scenario with the same high water level as that of 1910, 3) a fictional scenario with a flow 1.4 times that of 1910 and 4) a scenario with flow equivalent to that of 1910 without the current defence infrastructures. Loss can therefore be estimated for all insured risks except for automobiles.