Patent ID: 7627491

Claim:
A method of evaluating risks performed on a computer associated with flooding in a geographical region, comprising the steps of: defining a geographical region on the computer; dividing the geographical region into a plurality of grid cells; identifying data relating to characteristics of the geographic region within the plurality of grid cells, the characteristics including (i) a vertical distance of each grid cell to a relevant river grid cell, (ii) a horizontal distance of each grid cell to a relevant river grid cell, and (iii) a catchment area at each relevant river grid cell; determining, using the data from said identifying, a probability of an occurrence of a flood-related event by the computer in a selected grid cell in a defined recurrence interval using a regression model that uses the characteristics (i), (ii) and (iii) as observed values in the regression model; and using a result of said determining to calculate an insurance premium on the computer for a risk located within a portion of the geographical region that includes the selected grid cell; wherein the regression model uses at least the following linear model, logit( p )= b 0 +b 1 V DIST+ b 2 H DIST+ b 3 AREA wherein p is the probability that the selected grid cell is flooded in the defined recurrence interval, VDIST is the vertical distance of each grid cell to the relevant river grid cell, HDIST is the horizontal distance of grid cell to the relevant river grid cell, AREA is the catchment area at the relevant river grid cell, and b 0 , b 1 , b 2 and b 3 are regression coefficients of the regression model that are calibrated based on a climate type of the geographic region.