Short-Term Management of Water-Damage Claim Risk Using Ensemble Precipitation Forecasts

Abstract. Insurers are increasingly challenged by weather-related claims arising from property damage, yet they lack adequate tools for near-term planning because traditional actuarial models do not incorporate real-time weather forecasts. This study demonstrates that incorporating ensemble precipitation forecasts improves short-range (1–4 days ahead) predictions of property insurance claim counts, thereby enabling proactive risk management. We present a forecasting framework for two Norwegian cities, Bergen and Oslo, using precipitation forecasts to predict days exceeding operationally significant thresholds. The models are evaluated by their forecast skill and reliability in predicting claim surges, as well as by their economic value in a cost-loss decision context, illustrating the potential reduction in expected costs when early warning triggers are in place. Results show that weather-informed models substantially outperform baseline models based on climatology, improving discrimination of claim events and yielding up to 30–50 % reduction in expected daily costs under various ideal warning scenarios. Two case studies of extreme events highlight how weather forecasts translated into early claims warnings could guide resource allocation and customer advisories. Overall, the presented framework highlights the practical benefit of integrating meteorological forecast information into insurance operations and offers a template for insurers to enhance climate resilience through improved risk communication and short-term decision support.