1) A flood insurance model was developed for Georgia based on detailed flood hazard and risk modelling within an integrated flood risk management framework. 2) The model included flood mapping, calculating risk scores and potential damage/losses, and developing an index-based insurance scheme with risk-based premiums and payout principles. 3) While the insurance scheme was not piloted during the initial project due to various challenges, efforts are ongoing to address flooding and other natural hazards through policy interventions like risk financing and early warning systems.

1. Developing Climate Resilient Flood and Flash Flood
Management Practices to Protect Vulnerable
Communities of Georgia – The Role of Risk Modelling in
the Development of Flood Insurance Model for Georgia
Dr. Margaretta Ayoung
Presented at: DRR financing regional conference
Istanbul, Turkey, 4-5th October 2018

2. Presentation Outline
• Project Overview
• Flood Hazard Modelling and
Mapping Approach
• Flood Socio-economic risk
Modelling
• Development of Weather Index
Insurance Model
• Lessons Learned
• Next Steps

3. Project Overview
Project Objective
“To improve resilience of highly exposed regions of Georgia to hydro-meteorological threats that are increasing in
frequency and intensity as a result of climate change.”
Risk Knowledge – hazard and risk
modelling and mapping
Floodplain
zoning policy
Flood resilient
building codes
Flood Insurance
Scheme
Structural
interventions
CB Adaptation
measures
Agro-forestry
schemes
Multi-hazard
Risk
Assessment
Rehabilitated
hydrometric
network
Flood
forecasting and
EWS
Integrated
Flood Risk
Management
Enhancing
legislative and
policy
framework
Technology
transfer and
capacity
building
FRM
intervention
measures
Enhanced
monitoring,
forecasting
and early
warning
systems
Improved
community
resilience

4. Flood Insurance Approach
• Hazard
Modelling
• Flood Mapping
• Flood Zoning
Stage 1 – Flood
Modelling
• Risk Score
Calculation
• Damage and Loss
Calculation
Stage 2 - Risk
Modelling • Risk Based
Premium Setting
• Index-based pay
out principles
Stage 3 - Insurance
Scheme

5. Stage 1 - Flood Modelling
EUFD
Methodology
• Directive 2007/60/EC
• Assess of risk from flooding, mapping of the
flood extent and assets and humans
Hydrological
Modelling
•Detailed rainfall-runoff modelling based on
hydrometric data from 1935-Present
•Combined with soil, geology, landuse data,
topography
Hydraulic
Modelling
•Detailed 1D-2D model - Mike Flood
•> 300 river cross-section surveys
•10m DEM of floodplain
Flood
Mapping
•2, 5, 10, 20, 50, 100, 100 + CC, 500, 1000 year
•Flood zones defined

6. Flood hazard
maps and
receptor
datasets
Receptor data
(people,
property,
Infrastructure,
agric etc.)
Socio-
economic data
Flood Risk to
People,
Agriculture,
Infrastructure,
etc
Socio-
economic risk
model
GIS based socio-economic risk model
A bespoke tool developed in ESRI’s ArcGIS Desktop environment encapsulating business logic and
utilising spatial analytical functions.
Stage 2 - Risk Modelling

7. Socio-economic Risk Score
Damage Flood Risk
Property
Risk
Agricultural
Flood Risk
Physical
Infra-
structure
Social
Rioni
River
Basin
Risk Score

8. Flood Risk Socio-economics

9. Stage 3 – Insurance Scheme
Weather Index Insurance (WII) - financial instrument to mitigate losses - replace the need for Government/Donor
intervention after flood events
Weather
Index
Insurance
Equates
premiums to
risk exposure
Compares
annual
average
anticipated
losses
River gauging
to confirm
flood levels
Works in
tandem with
new structural
measures
Flood
protection
improve lead
to lower flood
premiums
Works in
tandem with
flood zoning
and FFEWS
Community co-
operation is
vital to success

10. Risk-based premium setting
A B
Flood
Zone
Premium
Agricultural
CategorySize (ha)
Property
Category
Number
Affected
• Crop type (e.g. Vegetables, Wheat, etc)
• Yield
• Price
• Flood seasonality
• Small Residential
• Large Residential
• Apartment
• Commercial
• Designated Floodways
• Functional Flood plains
• High Risk Zone

11. Pay out Principles
Index
• River Gauges
• Flood zoning 2-5 confirmed
• Trigger payout
Payment
calculation
• Property - compensation
based on depth of flooding
for registered house type
• Agricultural yield loss
based on flood month for
registered crop
Payout

12. • Extensive consultations with private insurance companies, with
insurance association, government.
• Hesitation/scepticism in the beginning, especially from state agencies,
and more interest at a later stage
• Despite strong interest from the partner national institutions, piloting of
insurance scheme in Rioni basin did not take place during the lifecycle of
the UNDP Project
WII Consultation and Outcome

13. • Piloting of the Insurance scheme in Rioni basin did not take place during the
lifecycle of the UNDP Project for a number of reasons including:
• Political readiness - Insufficient political readiness to ‘push’ it forward.
Frequent changes and reforms within the Government are delaying the
processes, requiring from UNDP to revisit the topic, and advocate for
introduction on a regular basis
• Financial – Lack of financial commitment expected from the state (central
or municipal)
• Technical - Single peril insurance scheme and single geographic focus were
potential drawbacks; under-developed insurance culture - low awareness,
insufficient understanding and a general mistrust.
WII Lessons Learned

14. Disaster Risk Transfer Mechanisms in Georgia:
Challenges and Opportunities
Market share per insurance type (%) Government subsidized agri. insurance scheme
0
10
20
30
40
50
60
70
80
90
100
2010 2011 2012 2013 2014 2015 2016
Source: L. Shekasheli, Sh. Jadugishvili, 2017 Insurance Market Research 2010-2016
Health Property Land transport Life Civil liability Other

15. Disaster Risk Transfer Mechanisms in Georgia:
Challenges and Opportunities
Natural Hazard Loss Assessment and Recovery System:

16. • A flood insurance model was developed based on detailed hazard and
risk modelling as part of an IFRM framework
• Rioni project successfully scaled up – $27 Million GCF funding secured
• Nationwide project to address multi-hazards through policy
interventions including risk financing, development of a multi-hazard
early warning system, implementation of structural and non-
structural measures, strengthening of institutional capacity and
community adaptive capacity
• All hydro meteorological hazards and risks to be modelled and
mapped - basis of project interventions
• Provides to climate risk information basis for further development
and implementation of the insurance scheme
Conclusions & Next Steps

17. Thank you