Thursday 6 August 2015
Drought stricken California’s Central Valley carries a flood price ticket of $24.1 billion
While thousands of people in California's Central Valley are experiencing such severe drought conditions that water has literally ceased running from their taps, Lloyd’s have today published a report which puts the cost of potential flood damage in the Central Valley at $24.1 billion.
JBA was commissioned by Lloyd’s of London to estimate the likelihood and impact of a severe flood in California’s Central Valley, which covers 19 counties, is home to 6.9 million people and contains $1 trillion of insurable assets, mostly agricultural.
Despite California’s propensity to drought, the study concludes that a 1-in-100-year flood event could result in $24.1 billion of damage. By the time demand surge and business interruption losses have been added on to this figure, it becomes a significant one for the insurance industry.
Hank Watkins, President of Lloyd’s America, said, “The report highlights that the Central Valley’s exposure to flooding is high and likely to increase. We hope our report will maintain awareness among businesses and communities, as well as the insurance industry, of flood risk in the Central Valley region. Ultimately, more sophisticated catastrophe modeling needs to be developed for the Central Valley in order to better understand and mitigate the potential losses that could result from extreme flood events.”
The image below shows Central Valley counties with the proportion of the area flooded by the 1-in-200-year flood (based on JBA Global Flood Map data).
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