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🌊 '''Storm surge model''' is a specialized [[Definition:Catastrophe model | catastrophe modeling]] tool that simulates the coastal flooding caused when tropical cyclones, hurricanes, or severe storms push seawater inland beyond normal tidal levels. In insurance, these models are essential components of the broader catastrophe risk quantification framework, enabling [[Definition:Underwriting | underwriters]], [[Definition:Reinsurer | reinsurers]], and [[Definition:Rating agency | rating agencies]] to estimate potential flood losses to coastal properties — losses that can dwarf wind damage in major [[Definition:Hurricane | hurricane]] events. Storm surge models sit alongside wind, earthquake, and flood models in the toolkit that the insurance industry uses to price risk, set [[Definition:Reserves | reserves]], and structure [[Definition:Reinsurance | reinsurance]] programs.

🔬 These models operate through a multi-stage simulation pipeline. First, a stochastic event set generates thousands of synthetic storm tracks reflecting plausible meteorological scenarios, informed by historical storm data and climate science. For each event, a hydrodynamic engine — often solving shallow-water equations over high-resolution coastal terrain and bathymetric data — computes water surface elevations and inland inundation depths. The resulting flood footprints are then overlaid on detailed [[Definition:Exposure management | exposure]] databases that capture property locations, elevations, construction types, and values. A [[Definition:Vulnerability function | vulnerability module]] translates inundation depths into damage ratios, ultimately producing [[Definition:Probable maximum loss (PML) | probable maximum loss]] curves and [[Definition:Exceedance probability curve | exceedance probability]] distributions. Leading vendors such as [[Definition:AIR Worldwide | AIR Worldwide]], [[Definition:RMS | RMS]], and [[Definition:CoreLogic | CoreLogic]] maintain proprietary storm surge models that are continuously refined as topographic data improves, levee and seawall inventories are updated, and climate research advances understanding of storm intensification patterns.

🏗️ Given that storm surge accounted for a substantial share of insured losses in landmark events like Hurricane Katrina in the U.S. Gulf Coast and Typhoon Haiyan in the Philippines, the accuracy of these models carries enormous financial consequences. Insurers writing [[Definition:Homeowners insurance | homeowners]], [[Definition:Commercial property insurance | commercial property]], and [[Definition:Flood insurance | flood]] lines in exposed coastal zones rely on storm surge outputs to establish adequate [[Definition:Premium | premium]] levels and avoid adverse selection. Reinsurers and [[Definition:Insurance-linked securities (ILS) | ILS]] investors use the same models to price [[Definition:Catastrophe bond | catastrophe bonds]] and [[Definition:Industry loss warranty (ILW) | industry loss warranties]] with storm surge triggers. Regulatory bodies across hurricane-prone and typhoon-prone markets — including the United States, Japan, China, and Southeast Asian nations — increasingly expect insurers to demonstrate that their capital adequacy assessments incorporate credible storm surge scenarios, particularly as rising sea levels and coastal development amplify the exposure. Disparities between model vendors' surge estimates remain a live issue, pushing the market toward multi-model blending and greater transparency in model assumptions.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Catastrophe model]]
* [[Definition:Flood insurance]]
* [[Definition:Probable maximum loss (PML)]]
* [[Definition:Hurricane]]
* [[Definition:Exposure management]]
* [[Definition:Insurance-linked securities (ILS)]]
{{Div col end}}

Definition:Storm surge model - Revision history

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