Climate change is exacerbating the intensity and frequency of extreme flooding around the world and Luxembourg is not immune. In the summer of 2021, severe floods in the grand duchy destroyed homes and businesses, causing an estimated €125m in material damages.
Weather simulators are regularly used in the insurance industry to underwrite specific risks and price insurance policies. But as extreme weather events become more prevalent, more industries are turning to weather modelling to mitigate the effects of natural disasters.
This prompted Ibisa to soft launch its Weather Simulator in early May. The simulator estimates the probability of weather events based on historical data from any region in the world. Ibisa didn’t specify when the tool would be made available to the public, but clients can request reports on their website.
Rosa Aparici, project manager at Ibisa, said the simulator will help a wider range of industries budget and plan their activities. “We were supplying this data to insurance companies. Then we thought why not give it to other industries or even allow it for personal use?”
Jean-Baptiste Pleynet, co-founder of Ibisa, said the simulator can also be used to predict weather in preparation for a holiday. “Our vision with the weather simulator is to provide data that adds value to anyone who can benefit from it,” he said. Pleynet said the simulator can also measure wind speed and temperatures, which are useful predictors of heatwaves and hurricanes.
Saving billions in damages
Predicting extreme weather events can save billions. In 2022 alone, more than $3bn (€2.76bn) worth of damages was reportedly caused by just 10 extreme weather events. But knowing what mitigating actions to take often depends on the probability and frequency of these weather events occurring, according to Aparici.
She cited an example of a shopping centre in Valencia that wanted to build up their flood defenses. The coastal city had recently experienced heavy flooding and the shopping centre approached Ibisa to find out, depending on the frequency of flooding, if it is economically viable to install a new draining system. “Now that they know that every two years this event is going to happen and the shopping mall is going get flooded, they can decide if it’s affordable,” Aparici said.
In another use case, a construction company in the Ivory Coast tasked with building a hotel resort approached Ibisa for a report on rainfall in the area, which is prone to flooding and landslides. Aparici said the information allowed the company to determine its delivery schedule and improve staff safety. “It’s very powerful information,” Aparici said.
This article was published for the Delano Finance newsletter, the weekly source for financial news in Luxembourg. Subscribe using this link.