Category Archives: Hurricanes

2017 sets record for highest insured disaster losses

Munich Re has released its 2017 catastrophe review, and disaster related insured losses for the year are the highest on record at $135 billion.

The record losses are driven by the costliest hurricane season ever in the United States and widespread flooding in South Asia. Overall losses, including uninsured damage, came to $330 billion.

The United States made up about 50 percent of global insured losses in 2017, compared with just over 30 percent on average. Hurricane Harvey, which made landfall in Texas in August, was the costliest natural disaster of 2017, causing losses of $85 billion. Together with Hurricanes Irma and Maria, the 2017 hurricane season caused the most damage ever, with losses reaching $215 billion.

The United States also suffered a devastating wildfire season and at least five severe thunderstorms across the country, accompanied by tornadoes and hail.

Mark Bove, a senior research meteorologist at Munich Re, said in a New York Times interview that losses jumped in the United States because so many of the disasters hit highly populated areas: the Houston bay area, South Florida, Puerto Rico. It’s a trend that he expects to continue.

The I.I.I. has data on natural disasters here.

The Week in a Minute, 11/30/17

The III’s Michael Barry briefs our membership every week on key insurance related stories. Here are some highlights. 

 The I.I.I.’s James Lynch participated in Property Casualty Insurers Association of America’s Thursday, Nov. 30, satellite media tour on the dangers of marijuana-impaired drivers as states liberalize their marijuana laws.

The 2017 Atlantic hurricane season was the first one ever to feature three Category 4 storms making landfall on the U.S. mainland (Harvey in Texas, Irma in Florida) as well as a U.S. territory (Maria in Puerto Rick).

Twelve of 14 post-Hurricane Irma fatalities at The Rehabilitation Center of Hollywood Hills (Broward County) were deemed by the coroner to have been “homicides due to heat exposure.”

 

2017 Atlantic Hurricane Season in Review: One for the Record Books

By Philip J. Klotzbach, Ph.D.

The 2017 Atlantic hurricane season, which officially ends on November 30, has been extraordinary by any standard, with a total of 17 named storms, including 10 hurricanes—six of which were classified as major, storms, measuring Category 3-5 on the Saffir-Simpson Wind Scale.  Historically, 2017 ranked as a top-ten year in most widely recognized tropical cyclone (TC) metrics (Figure 1).

Figure 1: 2017 Atlantic tropical cyclone statistics compared with the 1981-2010 average as well as its rank compared with all historical Atlantic hurricane seasons since 1851.

What really distinguished the 2017 Atlantic hurricane season, however was the month of September (Figure 2).  All other months of 2017’s hurricane season had near-normal activity, while September broke the Atlantic calendar month record for named storm days, hurricane days, major hurricane days and Accumulated Cyclone Energy (ACE). (ACE is an integrated metric that takes into account the frequency, intensity and duration of storms.)

Figure 2: Atlantic ACE by month in 2017 compared with the 1981-2010 average. 

Atmospheric and oceanic conditions were conducive for an active season and this was especially true during September.  During the period from late August to late September when the season was most active, the tropical Atlantic had very low vertical wind shear (Figure 3).  Vertical wind shear is the change in wind direction with height in the atmosphere.  Strong vertical wind shear tilts the hurricane vortex, disrupting the circulation and preventing the pressure fall necessary to sustain a strong hurricane.  Sea surface temperatures were also much warmer than normal, providing more fuel for developing tropical cyclones (Figure 4).

Figure 3:  Vertical wind shear anomalies from late August to late September.  Blue colors indicate reduced vertical wind shear.  Reduced vertical wind shear dominated most of the tropical Atlantic into the eastern and central Caribbean.

 

Figure 4: Sea surface temperature anomalies across the tropical Pacific and Atlantic near the peak of the Atlantic hurricane season.  (The tropical Atlantic and Caribbean were much warmer than normal in 2017.)

Three of the 17 storms that formed in 2017 accounted for the lion’s share of damage.  Hurricane Harvey made landfall in central Texas as a Category 4 hurricane, then stalled near Houston, inundating the metropolitan area with record-setting rainfall.  Hurricane Irma cut a path of destruction across the Caribbean and tropical Atlantic, devastating several islands before becoming the first Category 5 hurricane to make landfall in Cuba since 1924 (Figure 5).  Irma then made landfall on the Florida Keys as a Category 4 hurricane.  Hurricane Maria became the first Category 5 hurricane on record to make landfall in Dominica, then it buffeted the US Virgin Islands before slamming into Puerto Rico as a Category 4 hurricane.  Maria was the strongest hurricane to make landfall in Puerto Rico since 1928.  While the final damage estimates are still being tallied, this season will certainly go down as one of the most devastating Atlantic hurricane seasons of all time.

Figure 5: Satellite imagery of Hurricane Irma as it pummeled the northern coast of Cuba.

Philip J. Klotzbach, Ph.D. is Research Scientist, Department of Atmospheric Science, Colorado State University and an I.I.I. Nonresident Scholar. You can follow him on Twitter at @PhilKlotzbach

Superstorm Sandy

By Phil Klotzbach, lead author of the Colorado State University (CSU) hurricane forecasting team, and I.I.I. non-resident scholar.

Five years ago this month (October 29), Superstorm (hurricane until a few hours before landfall) Sandy made landfall along the coast of New Jersey just northeast of Atlantic City.  Sandy was one of the most devastating hurricanes to hit the northeast United States, causing more than 70 fatalities and $50 billion dollars in damage. It was the deadliest Northeast United States hurricane since Agnes (1972) and the 2nd most expensive United States hurricane on record behind Katrina (2005).  While heavy rainfall and strong winds were part of Sandy’s legacy, the primary cause of the massive destruction and damage that occurred was due to high storm surge levels.

Sandy developed in the SW Caribbean on October 22 (Figure 1). This region is a typical hotbed for October Atlantic hurricanes.  The system slowly intensified, eventually reaching hurricane strength before hitting Jamaica as a Category 1 hurricane.  It briefly reached major hurricane strength (Category 3+ on the Saffir-Simpson Wind Scale) before making landfall in Cuba.

Figure 1: Track of Hurricane Sandy from its formation in the SW Caribbean until its dissipation in the northeast United States.  Figure courtesy of National Hurricane Center.

Landfall in Cuba weakened Sandy somewhat, and the system began to undergo structural changes as it interacted with a large upper-level low pressure area.  This upper-level low caused the inner core to lose intensity, but it also caused the storm to grow considerably in size.  Sandy weakened to a tropical storm, but then vertical wind shear (the change in wind direction with height in the atmosphere), began to abate and Sandy was able to re-intensify to hurricane strength.  The storm, however, retained its large, sprawling circulation. (Figure 2).  Tropical storm-force winds extended more than 900 miles away from the center of the circulation as it approached the United States coast, making it the largest Atlantic hurricane on record (since 1988).

Figure 2: Infrared satellite imagery of Hurricane Sandy on October 29 showing the large, sprawling nature of its circulation.  Figure courtesy of NOAA.

A large blocking high to the north of Sandy caused the storm to track to the northwest (Figure 3).  Once Sandy had finished transiting the warm waters of the Gulf Stream and moved over cooler shelf waters near the New Jersey coast, it completed its transition into a post-tropical cyclone several hours before landfall.

Figure 3: Mid-level weather pattern causing the anomalous track that Hurricane Sandy took.  Strong high pressure to the north of Sandy prevented recurvature and caused Sandy to track towards the northwest.  Figure courtesy of National Hurricane Center.

While the maximum intensity at the time of its New Jersey landfall was 80 mph – equivalent to a Category 1 hurricane – the storm’s large size triggered huge amounts of storm surge.  In addition, tides were running higher than normal, due to the lunar cycle; storm tide values shattered records in parts of New York City.  At the Battery, Manhattan’s southernmost tip, the storm tide exceeded 14 feet, which was more than four feet higher than the previous record set during a winter storm in December 1992.   Many other areas along the coast of New Jersey and in New York City reported storm surge levels of 5-8 feet from Sandy which combined with astronomical factors to cause massive inundation.

Sandy’s transition from hurricane to post-tropical cyclone immediately prior to landfall as well as the massive size of the system has helped us to refocus efforts in the five years since the storm to clearly delineate between the Saffir-Simpson Wind Scale category and potential impacts that the storm may generate. Just because a system transitions from a hurricane into a post-tropical system does not mean that its impacts have been ameliorated. While it has now been five years since Sandy’s landfall, it will forever be remembered in the northeast United States as an incredibly damaging storm.

Behind the Numbers: AIR’s Puerto Rico Estimate

Catastrophe modeler AIR shook up the insurance world this week with its insured loss estimate for the Caribbean from Hurricane Maria: $40 billion to $85 billion – which would put it on par with Hurricane Katrina and the 2011 Japan earthquake and tsunami as the worst insured catastrophes in history, according to I.I.I. research.

Concerned mixed with skepticism; RMS has an estimate less than half the size. This from the Artemis reinsurance blog:

The size of AIR’s industry loss estimate has already raised questions among industry analysts, some of whom are questioning the range and believe the eventual industry exposure could be even lower than the bottom end of it.

But AIR’s estimate reflects the enormous damage and disruption that hurricane Maria has caused and with Puerto Rico badly hit the final cost to insurance and reinsurance interests is going to be very high.

Late Thursday, AIR published an explanation of their estimate. They call it “all but the perfect storm for Puerto Rico.” Intense winds enveloped the island; not a corner escaped. And Puerto Rico, unlike most Caribbean islands, has a significant industrial presence – more than $120 billion, and that is where two-thirds of the AIR’s estimate comes from.

The range of the estimate is quite wide. For Puerto Rico by itself, it’s $35 billion to $70 billion. Sources of uncertainty, AIR indicates, are

  • Demand surge.
  • How dwellings will contend with the wind vs. water question.
  • How business interruption and business income losses will unfold, particularly among hotels. Other BI issues include how much excess inventory manufacturers have on hand, how soon infrastructure will resuscitate, and whether insurance settlements will be affected by political pressure.

Update: As were getting ready to post, RMS explained its pick. TL;DR – industrial buildings on the island are sturdily built, so not much damage. And Karen Clark & Co. puts Puerto Rico losses at $28 billion, in about the same range as RMS.

The Week in a Minute, 9/28/17

The III’s Michael Barry briefs our membership every week on key insurance related stories. Here are some highlights. 

  • One week after Hurricane Maria struck Puerto Rico, the U.S. territory’s residents are dealing with extensive power outages and a breakdown of the supply chain which brings food and other essentials to the island.
  • The U.S. signed an agreement with the European Union (EU) governing how U.S. insurers and reinsurers are regulated in EU nations.
  • California’s Canyon Fire (Orange/Riverside Counties) and Grass Fire (Alameda County) have generated mandatory evacuations and widespread news coverage.

NFIP reinsurance protection a good thing

From January 1, 2017, FEMA – the Federal Emergency Management Agency – secured increased reinsurance protection to share a meaningful portion of the risk of large and unexpected flooding with private reinsurance markets.

This placement of reinsurance transferred $1.042 billion in risk above a $4 billion deductible to 25 reinsurance companies.

Under this agreement, the reinsurers can cover 26 percent of losses between $4 billion and $8 billion arising from a single flooding event.

As Artemis blog reports here, with flood losses from Hurricanes Harvey and Irma on the rise, estimates suggest that the NFIP reinsurance program will pay out in full with losses from Hurricane Harvey alone.

Per Artemis: “The NFIP reinsurance program is a per-occurrence arrangement, meaning it covers a single loss event.”

Also noted by Artemis at the very end of its blog post, the NFIP reinsurance layer does not have a reinstatement provision.

This means that the NFIP cannot also claim on the program for its losses from Hurricane Irma as a second and separate event.

Nevertheless, it’s a good thing that NFIP secured first event coverage. A reinsurance payment for Hurricane Harvey flood losses will be welcome.

The Week in a Minute, 9/20/17

The I.I.I.’s California representative, Janet Ruiz briefed our membership this week on key insurance related stories. Here are some highlights. 

  • The I.I.I.’s Steven Weisbart was quoted in a Washington Post story on the insurance industry’s financial strength in the wake of Hurricanes Harvey and Irma.
  • A FEMA/State Disaster Recovery Center opened today (September 20) at the Carolyn Sims Center in Boynton Beach (Palm Beach County) for Floridians impacted by Hurricane Irma.
  • Florida’s Department of Financial Services opened Irma-related Insurance Village locales this week in St. Augustine, Jacksonville, Fort Myers, and Naples.
  • The Texas Department of Insurance (TDI) released details on Hurricane Harvey’s Disaster Assistance Mobile Unit Locations.
  • Maria made landfall as a Category 4 storm in southeast Puerto Rico Wednesday. The governor’s spokesperson said ‘this is a total disaster.’  The same evacuation centers used for Irma are filled with thousands of people according to CNN.
  • The LA Times offered these earthquake preparedness tips in the wake of the deadly 7.1 quake that struck Mexico City on Tuesday.
  • Politico posted last week an in-depth story on how Oklahoma’s earthquakes could adversely impact the U.S.’s energy supplies.  It was written by the author of Quakeland: On the Road to America’s Next Devastating Earthquake (Dutton 2017).
  • Dr. David Harkey will succeed Dr. Adrian Lund in January 2018 as president of the Insurance Institute for Highway Safety (IIHS) and the Highway Loss Data Institute (HLDI).

 

Disaster Relief: Preparing for Fraudsters

By I.I.I. staffer Brent Carris

While natural disasters have the unique ability to unify people, it is important to stay cognizant of scams and fraud that follow.

PropertyCasualty360 addressed potential scams in this article, noting that hurricane relief fraudsters are some of the first to appear after a storm. One way to avoid scams is to donate strictly to well-known reputable organizations such as the Red Cross or Direct Relief.  The Insurance Industry Charitable Foundation has a Hurricane Harvey disaster relief fund as well.

Affected homeowners should be wary of who they let into their home for repairs. Regulators in Florida are warning consumers not to sign Assignment of Benefits (AOB) forms to get repair work started.

FEMA has launched this page with information on disaster relief and how affected individuals can prepare for the arising fraudsters.

 

Concurrent Causation and Hurricane Irma claims

The issue of causation, especially when there may be multiple causes of loss, can be a tricky one for both insureds and insurers. It comes down to what caused the loss – and in what order.

Take the example of a major catastrophe, like a hurricane, where there may be property claims arising from both wind and water. Determining the cause of loss is key to determining whether there is coverage under the terms of an insurance policy because there are two policies in play, one for wind damage and one for flood damage.

Some jurisdictions subscribe to the “efficient proximate cause doctrine” while others subscribe to the “concurrent causation doctrine”.

What’s that?

The efficient proximate cause doctrine finds that where there is a concurrence of different perils, the efficient cause – the one that set the other in motion – is the cause to which the loss should be attributed.

Under the concurrent causation doctrine, when multiple perils contribute to a loss, coverage is allowed if at least one cause of the loss is covered by the policy.

In the case of Florida, a recent court decision adopted the concurrent causation doctrine, which will impact Hurricane Irma claims.