Non-Life Flood Risk

Overview

This calculator implements the gross capital requirement for the Flood Risk sub-module within the Solvency II Non-Life Underwriting standard formula.^[1] The Flood Risk requirement is defined as the economic capital necessary to cover the loss in basic own funds resulting from an extreme, low-frequency 1-in-200 year flood hazard.^[2]

Input Terms

• Flood SCR: The capital requirement for flood risk in each region after the Article 123 regional scenario and zone mechanics have been calculated.^[1]
• Annex VII Region: The selected region for each flood SCR amount. The page deduces the Article 123 regional correlation coefficient from the selected pair of Annex VII regions.^[1]
• Other Regions: The capital requirement for flood risk in regions outside the specified regional set.^[1]

Technical Rationale

The Flood Risk sub-module is calibrated to a 99.5% confidence level over a one-year horizon. It captures the sensitivity of the undertaking’s basic own funds to a catastrophic river, coastal, or pluvial flooding event. The standard formula uses a geographical scenario-based approach, summing the results for each hazard zone after applying the specified diversification rules between zones.^[1]

Article 123 separates flood into regional risk amounts because flood losses are geographically clustered, but not perfectly independent across river basins, coastal regions, and pluvial events. The prescribed regional correlation matrix recognizes partial diversification without allowing undertakings to treat separate regions as unrelated risks.^[1]

The other-flood component remains visible because the regulation treats specified regions and residual flood exposure differently. Keeping that boundary explicit makes the calculation an aggregation endpoint rather than a substitute for the regional scenario work.

The regional scenario, zone weighted-sum-insured, and reinsurance sequence mechanics remain separate Article 123 evidence before regional SCR aggregation.

Important Notes

• Scenario source discipline: Prepared catastrophe scenario amounts should be traceable to a documented valuation or exposure model. The calculator keeps the form focused on result-driving scenario amounts and leaves evidence review in the methodology file or governance workflow.
• Surface-Water vs. Riverine Flood: The standard formula provides a aggregated flood factor that typically combines riverine, coastal, and pluvial risks unless a more specific model is justified.
• Model boundary: This page is the final aggregation step. It does not calculate sums insured, weighted sums insured, specified regional losses, Scenario A, Scenario B, or the other-regions premium and diversification formula.
• Gross vs. Net SCR: This calculator determines the standalone Non-Life Flood Risk SCR. Solvency II risk is only finalized as a net impact on Basic Own Funds after diversification in Non-Life Risk, then within BSCR, and after the top-level LAC TP and LAC DT adjustments.
• Regulatory deviation: Material deviation from standard-formula assumptions at this layer may support a capital add-on or a move toward an internal model where justified.^[3]
• Reporting: The displayed result is intended to support the corresponding standard-formula component for the S.25.01.01 standard-formula reporting view.^[4]