Simulation of Resilience of an Insurance System to Flood Risk

Simulation of Resilience of anInsurance System to Flood Risk Exploration throughAgent Based Social Simulation Olivier Barreteau, Frédéric Grelot IRSTEA, UMR G-EAU, Montpellier

French « CatNat » system • Natural risk management in France • Land use regulation: zoning • Insurance: financialsolidarity • Cat-Nat: an insurance system based on national solidarity • Everyhouseholdinsuredagainstnaturaldisasters • Insurancecompanies have to provideit • Unlimitedwarrantyfrom state (reinsurance) • Cat-Nat fund

Viewpoints on CatNat • Efficient to cover damages • But: • Encourage risktakingbehavioural patterns • Lack of responsibility for local bodies • Resilience to global changes? • Climate • demography

A politicalchoice • Risk averse regime • Zoning with large interdiction area • Few damages, lowfees • Tensions over land access • Sharedrisks • Limited interdiction area • Higher damages, higherfeelevels • Tensions on fee collection • Issue of acceptability • Setting new zoning constraints for new population • Maximum feelevel for households out of flood prone area

Exploration through simulation • General objective • Test ABM as a tool to simulateCatNat system • Feedbacks between HH settlements and fund’sviability • Consequences of changes in context • Scope of thispresentation • Strategies for adaptation • No possibility for adaptation with land use regulation • Lateimplementation of zoning generatedangerousirreversibilities • Impact of insurance system

Virtual space: 5 independentterritorieswith a commonfund River Maximum flooding area

Rationale for 5 territories • Representcurrent situation at national level • Technical issue to compute composition of risks • Openingtowardsevolution of models • Test heterogeneity of local policies • Evolution of heterogeneity of risk exposition • Changes regardingcorrelationbetweenevents

CatNatABM: Class diagram

Dynamics • Generate new Households • New HH asks for a place for setting according to current land use patterns and preferences • Check for availability and legalaccess • Settle or seekclosest possible place • Randomgeneration for eachterritory in the same distribution • Update fee and/or zoning • Purpose of budget balance • Randomdrawing in an homogeneous distribution • reparation of houses

Model’sassumptions • Uniformity of housescharacteristicsregarding damages due to a flood • Constant demography • Perfectknowledgefrompolicy maker on climate and demography • No direct feedback fromhouseholds to policymakers • No default of payment

Householdscharacteristics • Preferences for settling • Attractivity for the river • Attractivity for alreadypopulated areas • Repulsion for ruinedhouses • Flood tolerance • Reaction to flood • Reparation of houses • Housesrepairedwithinsurance • If no insurance, housesrepairedwhen HH decide to stay

Indicators • Exposure to the alea • Flood prone area occupation (population, houses) • Damages • Number of floodedhouses • Number of ruins • Resilience of the system • Budget level of CatNatfund • Feelevel • Settlementpossibilities for newcomers

Scenarios: climate

Initialization • Initial conditions: • land use: centers {25; 75} • Feelevel= 0.01 • Parameters • Flood tolerance {0; 0.5; 1} • River attractivity  {0; 0.1; 0,2} • Repulsion factor {0; 0.5; 1} • Population increase rate  {0.005; 0.01}

Evolution of population Benchmark Insurance • Pathdependence to flood sequence • Strongerwithcenters close to the river • No clear impact of insurance floodTolerance = 0.5Pop increase rate = 0.1

Evolution of location of collectivities’ centers Benchmark Insurance • Pathdependencewith non tolerantinhabitants • Impact of insurancewithfullytolerantinhabitants • Biases: centersmoving to the river • Shouldrepresent shifts in attitude

Evolution of feelevels • Tworegimes of convergence dependingon flood tolerance • No clear influence of initial conditions

Perspectives • Land use regulation • Introduction of local bodies • Resistance to land use regulation • Exploration in the parameterspace • Heterogeneityamongsubareas • Impacts of changes in environment

Simulation of Resilience of an Insurance System to Flood Risk