The Flood Stops Here

Planning and execution help minimize repeat loss

Weeks of heavy rain engulfed an historic eastern German city earlier this year, causing the Elbe River to overflow its banks. While most buildings succumbed to the rising water, one particular Affiliated FM insured was prepared to suppress the unrelenting flood surge.

The facility—a prestigious hotel—sits within a 100– and 500–year flood zone. In 2002, the hotel was severely hit by a 200–year flood event. The result was more than US$15 million in property damage and an additional US$5 million in time element loss.

Lessons learned
When the account was submitted to Affiliated FM in 2007, the broker indicated that improvements had been made since the 2002 flood to help better protect the building. In fact, the insured had invested US$2.5 million in flood protection, including purchasing mobile flood walls rated for a 500–year flood event. Further discussion between the broker, insured and Affiliated FM revealed that the staff undergoes annual training on how to properly and effectively erect the flood walls. And, to help prepare the staff in the event of another flood, a written flood emergency response plan (FERP) was developed, based on lessons learned from the flood in 2002.

Following a baseline field engineering visit in 2008, Affiliated FM recommended that the insured take a few small additional steps to improve their FERP. Specifically, improvements to the technical infrastructure and the relocation of high-value equipment/stock were recommended to help minimize future loss due to flooding.

History repeats itself ... almost
When the swollen Elbe River breached its banks again in June of this year, it forced German authorities to evacuate 10 villages and shut one of the main railway routes. The hotel, once again, was right in the path of the surging water. But this time, the result was dramatically different. Thanks in large part to a well–executed FERP and quickly erected mobile flood walls, minimal damage occurred in and around the hotel. Instead of a devastating loss—like 2002—the damage was contained and the flood water provided a minimal distraction for the hotel.

Flood loss is preventable
Historically, flood has been the most costly natural hazard in the world; however, the majority of flood is predictable, inevitable and—most importantly—preventable. Flood maps help identify areas that have been flooded in the past and research tells us that about 80 percent of all flood loss occurs within these predictable areas.

The easiest way to minimize your clients’ exposure to flooding is to recommend they locate outside of the high hazard floodplain. While there may be some incentive to locate their facility in a flood zone, clients might not be aware of the impact a flood at their location will have on the long-term continuity of their business.

For your clients exposed to flooding, there are low-cost and effective physical protect schemes to keep floodwater out of key areas and away from equipment. Some of these include adding additional curbing to redirect water away from key buildings and building openings. You also can advise your clients to relocate high-value items, such as stock, supplies and important records or plans to buildings that are not exposed to flood.

FERP is fundamental
While physical solutions are always best, implementing a flood emergency response plan (FERP) can have a big impact on mitigating food loss to your client’s business. A FERP is a documented plan of actions a client will take when flood is imminent. Our loss history shows that clients that effectively execute their documented FERP, experience losses that are 3.5 times less severe than those without one.

If you have a client exposed to flood, they don't have to be a victim to flood. There are solutions that they can implement—like the German hotel that installed mobile flood walls—and Affiliated FM is available to help. Contact your Affiliated FM account engineer for more information and check out the Natural Hazard Toolkit on our website for some simple ideas on developing a FERP.

Note: This information does not constitute, replace or supplement policy language. The liability of Affiliated FM is limited to that contained in its insurance policies.