Flood And Hurricane Modelling In Unison

A new approach in loss estimation for correlated hazards

By Dr. David Cross, Principal Analyst & Catastrophe Model Specialist, JBA Risk Management —

As global temperatures rise, hurricanes are bringing heavier rainfall and causing greater potential for destructive flooding. Understanding how wind, surge, and inland flood interact is essential for loss estimation and financial and societal resilience.

In response, JBA Risk Management (JBA) and Applied Research Associates (ARA) have combined their world-leading models to offer a unified approach to hurricane and flood risk.

The most powerful models are built not just on the best data and science, but on strategic collaboration and shared values. This belief has brought together JBA and ARA to align their world-leading expertise in flood and hurricane modelling, offering clients a flexible, joined-up framework for hurricane wind, storm surge, and inland flood risk across the United States.

Our approach allows users to draw on the best-in-class modelling they already know and trust – HurLoss® from ARA for hurricane wind and surge and JBA’s inland flood model – while enabling deeper insight when used together. By integrating our strengths, we give insurers, reinsurers, and risk managers choice, coherence, and confidence in understanding the full spectrum of hurricane-related losses.

Why joint modelling matters

Hurricane impacts are growing with climate change (Figure 1). Rising ocean temperatures provide more energy for hurricanes as they spin-up at sea, while rising air temperatures mean more moisture, increasing the potential for extreme rainfall and flooding. Events such as the Texas flooding of July 2025 from Tropical Storm Barry show how tropical moisture brought inland can lead to catastrophic impacts.

These “compound” events – where wind, surge, and inland flood coincide – present a growing challenge for insurers and risk managers. Flooding has always accompanied hurricanes, but a trend toward slower-moving, rain-laden storms (Harvey, Florence) makes joint assessment essential for accurate loss estimation.
The challenge of correlated hurricane losses

The challenge of correlated hurricane losses

Recent hurricanes such as Helene and Milton underline the need for a unified perspective. Helene was the deadliest US mainland hurricane since Katrina (2005) causing an estimated $17.5bn in insured losses, while Milton – the fifth-strongest Atlantic hurricane on record – generated around $20bn in insured losses.

Floods and hurricanes are complex hazards that are typically modelled separately to achieve the best results. For many insurers, this is sufficient and aligns with what they expect from model vendors. But modelling each peril in isolation can lead to underestimation or misrepresentation of tail losses when hazards are correlated, since the total loss variance must be estimated post hoc using assumptions about how these hazards interact.

In the case of Hurricane Harvey, Lloyds research has shown that insured losses were far lower than total economic losses, which were dominated by flood damage. This disparity arose because wind and flood were treated as separate perils—both in insurance coverage and in risk modelling. While wind risk was widely captured within standard homeowners’ and renters’ policies, flood losses fell largely under the National Flood Insurance Program (NFIP), where uptake was low due to affordability issues and limitations in flood mapping. The result was a fragmented view of hurricane losses that underestimated the combined impact of wind and flood, leaving many communities underinsured.

Floods and hurricanes are complex hazards; therefore, they are typically modelled independently to achieve the best results.
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Why combining separate models can understate tail losses

Imagine running two separate catastrophe models – one for hurricane wind and one for inland flood – each with its own independently generated event set. When the results are combined, there’s no guarantee that the flood event with the largest loss aligns with the wind event with the largest loss, even if in practice, both could have been triggered by the same hurricane.

The result is a combined loss distribution that misrepresents compound extremes. Because unrelated events are blended (e.g., moderate wind with moderate flood), the aggregation introduces artificial smoothing, which dampens the upper tail of the distribution. This leads to underestimated loss volatility, reducing the perceived risk of co-occurring wind and flood losses in extreme years.

Two leaders, one vision

Our vision is to bring together the best science and data via two very different modelling disciplines – Hurricane and Flood – to support decision-making in insurance and social resilience. This alignment empowers clients to tailor their risk modelling approach – with confidence that each model reflects best practice, and that their combined use enhances, rather than replaces, standalone value.

Read the complete blog by Dr. David Cross, with charts and figures, to learn how the joint solution connects ARA’s hurricane rainfall with JBA’s flood hydrology, creating an event-based workflow that models the full hydrological response of US catchments.

For more information about using the JBA’s inland flood model independently or in tandem with ARA’s HurLoss, contact JBA Risk Management.

About JBA Risk Management

Established in 2011, we are a global leader in flood risk management.

Known as The Flood People®, we offer flood maps, catastrophe models and analytics used by some of the world’s largest insurers, reinsurers, financial institutions, property companies and governments. We’re experts in translating complex, scientific data into useful information, using sophisticated hydraulic approaches and models to provide cutting-edge flood risk intelligence.

As part of the JBA group – a specialist environment, engineering and risk consultancy business established more than 20 years ago – we work closely with leading academic institutions in the field of flood risk. We also support our independent charity, JBA Trust, which enables research, education and training in the water environment sector.

For more information, visit www.jbarisk.com.

About Applied Research Associates

Applied Research Associates (ARA) is a 100% employee-owned technology solutions company with more than 2,300 employee-owners across the United States and beyond. Our dedicated team brings deep technical expertise and a passion for solving complex challenges – creating innovative solutions that protect our safety, security, and way of life.  

At ARA, every project is an opportunity to exceed expectations. We deliver solutions that not only meet mission objectives but unlock new possibilities for the future. For more information, visit www.ara.com.

Source: JBA Risk Management