While there’s much focus on storm surge risk in New Orleans as we mark the 10th anniversary of Hurricane Katrina, two new reports highlight the vulnerability of other U.S. coastal cities to storm surge flooding.

An analysis by Karen Clark & Co ranks the U.S. cities most vulnerable to storm surge flooding based on losses to residential, commercial and industrial properties from the 100 year hurricane.

The findings may surprise you.

KCC reveals that some of the cities most vulnerable to storm surge flooding have not been impacted for decades. A few have not experienced a direct hit from a major hurricane in the historical record.

Tampa/St. Petersburg, Florida is the metropolitan area most vulnerable to storm surge flooding, according to KCC, with a loss potential of $175 billion.

Four of the top cities (Tampa, Miami, Fort Myers and Sarasota) are in Florida, and the west coast of the state is more vulnerable than the east coast.

In fact, three cities—Tampa, New Orleans and New York—will likely have losses exceeding $100 billion from the 100 year event.

KCC notes that most of the flood damage potential is currently not insured, and that “private flood insurance presents a significant opportunity for insurers that have the right tools for understanding the risk.”

Meanwhile, a new report by catastrophe modeling firm RMS, took a look at six coastal cities in the U.S. to evaluate how losses from storm surge are expected to increase in the next 85 years and found that cities such as Tampa, Miami and New York face greater risk of economic loss from storm surge.

To evaluate risk, RMS compared the chance of each city sustaining at least $15 billion in economic losses from storm surge—the amount of loss that would occur if the same area of New Orleans was flooded today as was flooded in 2005.

Based on its findings, Tampa has a 1-in-80 chance of experiencing at least $15 billion storm surge losses this year, followed by Miami with a 1-in-125 chance and New York with a 1-in-200 chance.

New Orleans still faces significant risk, with a 1-in-440 chance of at least $15 billion in economic losses related to a storm surge event, RMS noted.

Looking ahead to 2100, the likelihood of those cities sustaining this level of losses rises dramatically.

By then both Tampa and Miami will have a 1-in-30 chance of experiencing at least $15 billion in economic losses related to a storm surge event, while in New York the chance increases to 1-in-45 and in New Orleans to 1-in-315.

Here’s the visual on RMS’ findings via its infographic:



The Insurance Information Institute (I.I.I.) is looking back at the costliest hurricane in U.S. history that took 1,800 lives and cost $125 billion in total economic losses, via a comprehensive infographic.

Insurance claims by coverage and state, total National Flood Insurance Program losses from Katrina, and other sources of Katrina recovery funds are all detailed.

Another compelling section to the infographic asks where are we now?

One of the fascinating analogies it draws is that even as awareness of flooding due to coastal storms rises, so too does the population of coastal communities.

As the I.I.I. notes, the 10 year anniversary of Hurricane Katrina gives us a timely opportunity to look at the nation’s preparedness for megadisasters.

I.I.I. disaster preparedness experts will be available via satellite media tour on Thursday August 27 to discuss how individuals and small business owners can better prepare.

View the infographic below to see Hurricane Katrina by the numbers:





I was in New Orleans last week speaking at a Louisiana Department of Insurance conference marking the 10th anniversary of Hurricanes Katrina and Rita, writes Insurance Information Institute (I.I.I.) chief actuary James Lynch.

State Insurance Commissioner Jim Donelon (pictured below) organized the conference to emphasize how the state’s property insurance market “is more competitive and more viable than it was the day before Hurricane Katrina.” The state sought private market solutions to keep the marketplace vibrant in the wake of more than $25 billion in insured losses.


Louisiana adopted a statewide building code so structures would be better able to withstand a hurricane. It abolished its politically appointed Insurance Rating Commission, which made it easier for insurers to charge fair premiums. And the state carefully winnowed customers out of its insurer of last resort, Louisiana Citizens Property Insurance Corp. Citizens’ market share soared after the 2005 hurricane season, approaching 10 percent by 2008. By 2014, its market share had fallen to 1.8 percent.

I spoke on a panel about the state’s property insurance markets operate today. I tried to emphasize how Louisiana’s experience shows the importance of adequate insurance. We also talked about alternative capital and how it is shaping the pricing of catastrophe reinsurance, a topic I.I.I. has discussed here.

Over the next few weeks, you will be seeing a lot of media coverage of the 10th anniversary of Hurricane Katrina. Here are some notable links:

  • The New Orleans Times-Picayune won a Pulitzer Prize for its coverage. The paper recaps that work and adds an up-to-date perspective here (h/t to I.I.I.’s Diane Portantiere for the link).
  • NPR is pouring out audio reports this month on Hurricane Katrina: 10 Years of Recovery and Reflection.
  • Forbes contributor Marshall Shepherd talked to meteorologists who noted how forecasting has improved in the past 10 years. Lots of interesting insights, including Colorado State University hurricane expert Phil Klotzbach, who sadly notes that a well-forecast hurricane like Katrina still resulted in more than 1,500 deaths. Klotzbach wondered how many survivors of Category 5 Hurricane Camille in 1969 reasoned that Cat 3 Katrina “would be a piece of cake.” I can confirm that Mississippi Governor Haley Barbour, in his tick-tock memoir about the storm and its aftermath, constantly referred back to his Camille experience – until he saw Katrina’s devastation. Tragically, the breadth and height of Katrina’s storm surge were unprecedented.
  • Barbour’s was one of many books published to coincide with the anniversary. The New York Times Book Review on August 7 featured New Orleans works, including a review of “Katrina: After the Flood,” about the city’s recovery, and a roundup of works examining the tragedy from racial, social and cultural perspectives.
  • Business Insurance discusses how catastrophe models have improved in the past 10 years, particularly in the quality of the input the models receive:
    • For example, casino barges moored on the Mississippi Gulf coast, badly damaged in Katrina’s storm surge, often were wrongly classified as normal buildings, said Jayanta Guin, executive vice president at Boston-based catastrophe modeler AIR Worldwide. Now, modelers have better data on the construction characteristics, occupancy, height and other aspects of individual buildings, he said.
  • Global Insurer Allianz used the anniversary to draw on its own database of major business insurance claims worldwide to examine trends in catastrophe losses, particularly (but not exclusively) marine losses. Its report, released August 18, points to these lessons learned:
    • Storm surge can cause more damage than high winds. Storm surge has been a contributing factor in half of the costliest U.S. storms.
    • Levees in the United States need improvement, even after the rebuilding of New Orleans’ levees after Katrina.
    • Most wind damage occurred “to the building envelope” – roof, walls, windows.
    • Demand surge can not only affect the price of materials and workers, post storm, it can affect the quality of materials, as we famously saw with drywall that created a new set of issues.


More than 6.6 million homes on the Atlantic and Gulf coasts are at risk of hurricane-driven storm surge with a total reconstruction cost value (RCV) of nearly $1.5 trillion.

The latest annual analysis from CoreLogic finds that the Atlantic Coast has more than 3.8 million homes at risk of storm surge in 2015 with a total projected reconstruction cost value of $939 billion, while the Gulf Coast has just under 2.8 million homes at risk and nearly $549 billion in potential exposure.

Which states have the highest total number of properties at risk?

Six states—Florida, Louisiana, New York, New Jersey, Texas and Virginia—account for more than three-quarters of all at-risk homes across the United States. Florida has the highest total number of properties at various risk levels (2.5 million), followed by Louisiana (769,272), New York (464,534), New Jersey (446,148), Texas (441, 304) and Virginia (420,052).

But if you rank the states by the highest total projected reconstruction costs in 2015, the top five are: Florida ($491.1 billion), New York ($177.4 billion), Louisiana ($162.1 billion), New Jersey ($126.8 billion) and Virginia ($91.1 billion).

CoreLogic makes the point that even though Louisiana has the second highest number of homes at risk to storm surge in 2015, only one-quarter are in the extreme or very high storm surge category, due in large part to the upgrade and expansion of levees in the state in the 10 years since Hurricane Katrina.

As Dr. Tom Jeffery, senior hazard risk scientist for CoreLogic says:

The number of hurricanes each year is less important than the location of where the next hurricane will come ashore. It only takes one hurricane that pushes storm surge into a major metropolitan area for the damage to tally in the billions of dollars. With new home construction, and any amount of sea-level rise, the number of homes at risk of storm surge damage will continue to increase.”

CoreLogic’s analysis comes as the National Hurricane Center (NHC) debuts experimental storm surge watch and warning graphics for the 2015 hurricane season:


Storm surge is often the greatest threat to life and property in the event of a hurricane. While most coastal residents can remain in their homes and stay safe from a storm’s winds, evacuations are generally needed to keep people safe from storm surge, the NHC says.

It’s important to note that many properties located outside designated FEMA flood zones are still at risk for storm surge damage.

As CoreLogic reminds us, homeowners who live outside the FEMA flood zones frequently do not carry flood insurance, given that there is no mandate to do so, and therefore may not be aware of the potential risk storm surge poses to their properties.

Data in the full CoreLogic report can be found here.

Check out I.I.I. facts and statistics on flood insurance here.

By now you’ll have read the latest forecasts calling for a below-average Atlantic hurricane season.

NOAA, Colorado State University’s Tropical Meteorology Project, North Carolina State University, WSI and London-based consortium Tropical Storm Risk all seem to concur in their respective outlooks that the 2015 hurricane season which officially begins June 1 will be well below-norm.

TSR, for example, predicts Atlantic hurricane activity in 2015 will be about 65 percent below the long-term average. Should this forecast verify, TSR noted that it would imply that the active phase for Atlantic hurricane activity which began in 1995 has likely ended.

Still it’s important to note that the forecasts come with the caveat that all predictions are just that, and the likelihood of issuing a precise forecast in late May is at best moderate. In other words, uncertainties remain.

These are wise words.

A recent report by Karen Clark & Co pointed to the rising vulnerability of the U.S. to hurricanes and other coastal hazards because of increasing concentrations of property values along the coast.

Of the $90 trillion in total U.S. property exposure, over $16 trillion is in the first tier of Gulf and Atlantic coastal counties, an increase from $14.5 trillion in 2012, KCC said.

KCC then superimposed 100 year U.S. hurricane events on the 2014 property values in its database. The result was that three regions—Texas, Florida and the Northeast—emerge as the most likely for mega-catastrophes.

In all of these regions, the largest losses from the 100 year hurricanes making landfall near Galveston-Houston, Miami and Western Long Island, are much larger than the 100 year PMLs (Probable Maximum Losses).

As insurance industry execs know, it only takes one hurricane to make landfall for a below-average season to become active and record losses to ensue. Here’s a visual of what the 1992 season—the year of Hurricane Andrew—looked like, courtesy of Weather Underground:


Hurricane facts and statistics are available from the I.I.I. here.

Just in time for the peak of hurricane season, our updated paper on the residual property market is hot off the press.

At first glance the numbers on the property insurance provided by the nation’s FAIR and Beach and Windstorm plans indicate that attempts by certain states to reduce the size of their plans appear to be paying off.

As you’ll see, the exposure value of the residual property market in hurricane-exposed states has declined significantly from the peak levels seen in 2011. In fact between 2011 and 2013, total exposure to loss in the plans fell by almost 30 percent – from $885 billion to $639 billion.

Why such a drop?

Florida Citizens, a plan that accounts for more than half (51 percent) of the total FAIR Plans’ exposure to loss, saw its exposure drop by nearly 50 percent from $429.4 billion in 2012 to $228.9 billion in 2013, as Citizens took much-needed steps to reduce its size.

This accounted for the overall reduction in total exposure under the FAIR plans. In 2013 total exposure to loss in the FAIR Plans was $445.6 billion, a 38 percent drop from its 2011 peak of $715.3 billion.

But what of the Beach and Windstorm plans?

Latest data show that between 2011 and 2013 exposure to loss in the Beach and Windstorm Plans actually grew by 14 percent.

Five state Beach and Windstorm plans are covered in our report: Alabama, Mississippi, North Carolina, South Carolina and Texas.

Over a longer time period, 2005 to 2013, the I.I.I. finds that some of the Beach and Windstorm plans saw accelerating growth. For example, total exposure to loss in the Texas Beach Plan (the Texas Windstorm Insurance Association (TWIA)) increased by 230 percent during this period.

A plan that would move TWIA’s policies over to private insurers and depopulate its book of business (much like Florida Citizens has done) is in the works, but so far nothing definite.

An ongoing and arguably more pressing concern is the fact that many of the residual market plans charge rates that are not actuarially sound and do not accurately reflect the risk of loss.

What does this mean? The I.I.I. warns that a major hurricane could expose residents in certain states to billions of dollars in post-storm assessments:

While hurricane activity in the most exposed states may have been lower in recent years, there is no question that over the long-term major hurricanes will cause extensive damage in future. This highlights how important it is for the rates charged by these plans to be actuarially sound.”

Forecasters’ Twitter feeds are alight this morning as to the potential development of two systems in the tropical Atlantic.

Here’s the latest graphic of where they’re located, courtesy of the National Hurricane Center (NHC):










The NHC gives the first disturbance currently located several hundred miles east of the southern Windward Islands a 50 percent chance of tropical cyclone formation in the next five days.

The second disturbance, a tropical wave located 1,000 miles east of the Lesser Antilles, has a low (20 percent) chance of tropical storm formation in the next five days.

Over at Weather Underground, Dr. Jeff Masters noted that if the first disturbance (designated Invest 96L by the NHC) does develop, it would likely be similar to Tropical Storm Bertha of early August while it is in the Caribbean—a weak and disorganized system that struggles against dry air.

Meanwhile @EricHolthaus tweets that Invest 96L could be a tropical threat to the U.S. next week, based on the first model runs.

It’s still too early to tell, but Hurricane Hunters are on call to investigate 96L Thursday afternoon if necessary.

Check out I.I.I. facts and statistics on hurricanes.

And a shout-out to  Paul Dzielinski of The Dec Page who hosts Calvalcade of Risk #215 Dog Days of Summer edition here.

Forecasters with NOAA’s Climate Prediction Center now say the chances of a below-normal Atlantic hurricane season have increased to 70 percent, up from 50 percent in May.

In its updated outlook, NOAA said overall atmospheric and oceanic conditions that are not favorable for storm development will persist through the season.

Check out the revised numbers in this NOAA graphic:

However, coastal residents may want to heed the words of NOAA lead forecaster Dr. Gerry Bell:

Tropical storms and hurricanes can strike the U.S. during below-normal seasons, as we have already seen this year when Arthur made landfall in North Carolina as a category-2 hurricane. We urge everyone to remain prepared and be on alert throughout the season.”

This echoes the warning of others. After all, it only takes one landfalling hurricane for a season to go from below-active to active for coastal residents.

In a recent post gave the classic examples of 1992 and 1983:

The 1992 season produced only six named storms and one subtropical storm. However, one of those named storms was Hurricane Andrew, which devastated South Florida as a Category 5 hurricane. In 1983 there were only four named storms, but one of them was Alicia. The Category 3 hurricane hit the Houston-Galveston area and caused almost as many direct fatalities there as Andrew did in South Florida.”

The $15.5 billion in estimated property losses ($23.4 billion in 2013 dollars) paid out by insurers for Hurricane Andrew ranks second in a PCS chart via the I.I.I. of the 10 most costly hurricanes in U.S. history, after Hurricane Katrina in 2005.

If Hurricane Andrew were to occur today, Karen Clark & Company estimates insured property losses would total $57 billion, based on current exposures.

As we head into August and the weekend, here are some of the stories from around the insurance blogosphere that piqued our interest:

Bertha: Tropical storm warnings have been issued for Puerto Rico, the U.S. and British Virgin Islands and other nearby islands as Tropical Storm Bertha – the second named storm of the 2014 Atlantic hurricane season – approaches the Caribbean. Early Friday, the National Hurricane Center (NHC) reports that Bertha’s winds are near 45 mph with no significant change in strength expected in the next few days. The latest 5-day forecast track for Bertha via the NHC has it staying well off the U.S. East Coast – let’s hope it stays that way.

Commercial Rate Increases Slow: Prices for commercial property/casualty insurance continued to slide in the second quarter of 2014, according to the latest quarterly survey from the Council of Insurance Agents & Brokers. On average, prices for small, medium and large accounts eased by a modest -0.5 percent during the second quarter, compared with 1.5 percent in the first quarter. Competition continued to drive the market, the Council said. Of note, pricing for property fell into negative territory with a -2.6 percent drop last quarter compared with flat pricing in the first quarter.

CAT Bond, ILS Market Dashboard: Looking for real-time metrics of the growing insurance-linked securities (ILS) and catastrophe bond market? Look no further than the just-launched Artemis Dashboard, an easy-to-use tool that allows you to access the data behind the transactions. You can view the current size of the market, issuance for the current year, top sponsors in the market as well as analyze outstanding cat bond and ILS market by key metrics such as the mix of perils, triggers, expected loss levels and pricing, and also data about the development of the market over time.

The I.I.I. has additional resources on these topics. Check out I.I.I. facts + statistics on hurricanes and catastrophe bonds.

Some 6.5 million U.S. homes with a total reconstruction value of nearly $1.5 trillion are at risk of damage from hurricane-driven storm surge, and more than $986 billion of that risk is concentrated in 15 metro areas, according to an annual report by CoreLogic.

The 2014 analysis by CoreLogic found that by state, Florida ranks number one for the number of homes at risk, with nearly 2.5 million homes and $490 billion in total projected reconstruction costs.

At the local level the New York metropolitan area (including northern New Jersey and Long Island) contains not only the most number of homes at risk for potential storm surge damage (687,412), but also the highest total reconstruction value of residential homes exposed, at more than $251 billion.

Ranked second among the major metropolitan areas at risk is Miami, Florida with 562,410 homes exposed and a total reconstruction value of $103.2 billion, followed by Tampa, Florida with 444,765 homes at risk and a total reconstruction value of $79.1 billion.

CoreLogic makes the point that just one storm of sufficient intensity occurring in or near one of the major metropolitan areas in the report is all that would be needed to cause tens of billions in property damage:

Past hurricane seasons have demonstrated the impact that just one storm of sufficient severity, located in exactly the wrong place, can achieve. Andrew, Katrina, and finally Sandy are still reminders that it takes no more than one hurricane roaring through a metropolitan and densely populated area to cause widespread property damage and threaten lives.”

CoreLogic goes on to explain that extensive regions along both the Gulf and Atlantic Coasts are vulnerable to storm surge, and yet many of the homeowners who live in these areas are not required to carry flood insurance because they are not located within a designated FEMA 100-year floodplain.

Since standard homeowners insurance excludes flood losses from either fresh or salt water, homeowners who are not located in FEMA Special Flood Hazard Areas, but are in high-risk surge zones, often do not consider buying National Flood Insurance Program (NFIP) coverage for their properties.”

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