Tag Archives: Coastal Property

Hurricane Matthew: Expect Wind, Rain, Storm Surge

Hurricane Matthew, a dangerous Category 3 storm, appears to have the cities along Florida’s east coast in its sights as it heads across the Bahamas today and tomorrow.

On its current track, Hurricane Matthew is expected to be very near the east coast of Florida by Thursday evening, according to the latest advisory from the National Hurricane Center (NHC).

States of emergency are in effect for all of Florida, coastal parts of Georgia and the Carolinas, and an evacuation has been ordered in coastal parts of South Carolina

Some slight restrengthening is possible in the next few days, the NHC said.

Currently Hurricane Matthew’s maximum sustained winds are near 120 mph (195 km/h) with higher gusts. Hurricane-force winds extend outward up to 45 miles (75 km) from the center, and tropical-storm-force winds extend outward up to 175 miles (280 km).

Whether or not Hurricane Matthew makes landfall in Florida, clearly the storm poses a serious threat to Florida, Georgia and the Carolinas, though much depends on the exact track it takes.

Note: the insured value of coastal properties in those four states (FL, GA, SC, NC) totaled $3.4 trillion in 2012, according to AIR Worldwide.

As RMS blog reports:

“The general model consensus suggests that Matthew will slide northward very near, if not scraping along, the Florida coastline as a strong hurricane, making at least tropical storm force winds, high surf, and heavy rain likely for most of the cities along Florida’s East Coast.”

The fact that Hurricane Matthew is moving slowly (currently at around 12 mph) means that the storm is likely to impact the southeast U.S. for a number of days.

With that in mind, here’s a quick review, courtesy of the Insurance Information Institute, of how insurance policies respond to hurricane-related damage caused by wind, rain and storm surge:

—Wind damage from tropical storms, hurricanes and tornadoes is covered under standard homeowners, renters and business insurance policies.

Flood damage resulting from heavy rain, storm surge and hurricanes is excluded under standard policies. Flood coverage is available from FEMA’s National Flood Insurance Program (NFIP) and from some private insurers.

—Damage to cars from tropical storms or hurricanes is covered under the optional comprehensive portion of an auto insurance policy. This includes wind damage, flooding and even falling objects such as tree limbs.

CoreLogic analysis shows that just under 3.9 million homes located along the Atlantic coast of the United States are at risk of hurricane-driven storm surge, with an estimated total reconstruction cost value (RCV) of $953 billion.

The state of Florida, which has the longest coastal area, has the most homes at risk at 2.7 million, and an estimated RCV of $196.1 billion.

Here’s the visual of Hurricane Matthew’s track, via Weather Underground:


Hurricane Matthew A Major Storm

The fifth Atlantic hurricane and the 13th named storm of the season—Matthew—is now a major Category 3 storm with 115 mph winds and forecasters predict little change in strength during the next 48 hours.

While any interaction with the U.S. coast is days away, and there is still considerable uncertainty in Hurricane Matthew’s modeled track, it’s important to be prepared for this major storm, as the National Hurricane Center (NHC) noted:

“Users are reminded that the average NHC track errors at days 4 and 5 are in the order of 175 and 230 miles, respectively. Therefore, it is too soon to rule out possible hurricane impacts from Matthew in Florida.”

Or, in the words of Wunderblog’s Dr. Jeff Masters:

“NHC has put Miami in the 5-day cone of uncertainty for Matthew, and it appears likely at this point that South Florida will experience at least the fringes of Matthew, with some heavy rains, if not a direct hit.”


For now forecasters expect Hurricane Matthew to continue heading west through the Caribbean,  and then turn to the north and northwest on Saturday/Sunday, putting the islands of Jamaica, Hispaniola and Cuba in its path.

The potential impact to those islands depends a lot on that turn, as NHC forecasters earlier noted:

“There is a significant spread in where the turn will occur and how fast Matthew will move afterwards.”

A hurricane watch may be required for Jamaica later today, according to the NHC.

Insurers, reinsurers and others will be monitoring Hurricane Matthew closely over the weekend and into next week.

Check out Insurance Information Institute facts and statistics on hurricanes here.



Storm Surge: The Trillion Dollar Risk

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.

2015 Hurricane Season Opener

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.

Why a Below-Normal Hurricane Forecast Doesn’t Matter

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 Weather.com 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.

No Gulf or Atlantic Coast Location Safe From Storm Surge Risk

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.”

NOAA: Near-Normal Hurricane Season Expected

With just over a week to go until the start of the 2014 Atlantic hurricane season, NOAA’s outlook  is hot off the press and garnering a lot of attention.

Here’s NOAA’s take on the season by the numbers:

â–  NOAA is calling for a 50 percent chance of a below-normal season, a 40 percent chance of a near-normal season, and only a 10 percent chance of an above-normal season.

â–  NOAA predicts a 70 percent likelihood of 8 to 13 named storms (winds of 39 mph or higher), of which 3 to 6 could become hurricanes (winds of 74 mph or higher), including 1 to 2 major hurricanes (Category 3, 4 or 5; winds of 111 mph or higher).

â–  These numbers are near or below the seasonal averages of 12 named storms, six hurricanes and three major hurricanes, based on the average from 1981 to 2010.

What are the reasons behind NOAA’s predictions for a near-normal or below-normal season?

A key driver of this year’s outlook is the anticipated development of El Nià ±o this summer that is expected to cause stronger wind shear which reduces the number and intensity of tropical storms and hurricanes.

Cooler Atlantic Ocean temperatures this season also suggest fewer hurricanes, NOAA says.

Despite the prognosis for a below-normal or near-normal season, it’s important that coastal residents don’t underestimate the hurricane threat. As Dr. Kathryn Sullivan, NOAA administrator says:

Even though we expect El Nià ±o to suppress the number of storms this season, it’s important to remember it takes only one land falling storm to cause a disaster.†

Note: NOAA’s seasonal hurricane outlook is not a hurricane landfall forecast and does not predict how many storms will hit land or where a storm will strike.

For a round-up of the latest predictions from the major hurricane forecasters check out this post at Dr. Jeff Masters’ Wunderblog.

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

Latest Hurricane Forecasts Sound Warning for U.S. East Coast

Hurricane forecasters are sounding a warning bell for the U.S. East coast in their latest predictions for the 2014 hurricane season, even as overall tropical storm activity is predicted to be much-less than normal.

WeatherBell Analytics says the very warm water off of the Eastern Seaboard is a concern, along with the oncoming El Nià ±o conditions.

In its latest commentary forecaster Joe Bastardi and the WeatherBell team notes:

We think this is a challenging year, one that has a greater threat of higher intensity storms closer to the coast, and, where like 2012, warnings will frequently be issued with the first official NHC advisory.†

WeatherBell Analytics is calling for a total of 8 to 10 named storms, with 3-5 hurricanes and 1-2 major hurricanes.

According to WeatherBell, there have been plenty of El Nià ±o years with high impact seasons for the U.S. coast: 1957, 1965, 1969, 1976, 1983 (fading but still there), 1991, 1992, 2002, and 2004.

The forecasters say this pattern favors stronger storms (relative to normals) in-close to the U.S. rather than in the deep tropics which will have less to much-less than normal activity this year.

There is nothing to prohibit another Sandy-type hit from the southeast or three storms up the East Coast in one year despite a relatively low number of named storms in a season.†

Check out this post by Eric Holthaus over at Slate’s Future Tense blog for his take on how this year’s El Nià ±o could grow into a monster.

Meanwhile, London-based consortium Tropical Storm Risk (TSR) has lowered its forecast and predicts Atlantic hurricane activity in 2014 will be about 25 percent below the 1950-2013 long-term norm and about 40 percent below the recent 2004-2013 10-year norm.

In its updated forecast TSR is calling for 12 named storms, 5 hurricanes and 2 major (Category 3 and higher) hurricanes.

TSR says two key factors in its forecast for below-normal activity are: lighter trade winds over the Caribbean and North Atlantic coinciding with the likely development of a moderate El Nià ±o; and cooler than normal sea surface temperatures in the tropical North Atlantic.

TSR says both these predictors will have a moderately suppressing effect on activity.

A post over at Artemis blog  points out that while El Nià ±o typically results in a below average hurricane season in terms of the number of storms that form, that is no guarantee of a benign season in terms of catastrophic losses as that is down to the strength or severity and path of any storms that do form.

Updated forecasts will be released around June 1, when hurricane season opens.

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

2013 Atlantic Hurricane Season Roundup

As the 2013 Atlantic hurricane season comes to a close, it may be easy to dismiss the significance of this year’s season.

While it’s true that this year had the fewest number of hurricanes since 1982, the 2013 hurricane season was only the third below-normal season in the last 19 years, since 1995, when the current high-activity era for Atlantic hurricanes began, according to forecasters.

A NOAA press release quotes Gerry Bell, lead seasonal hurricane forecaster at NOAA’s Climate Prediction Center, a division of the National Weather Service:

A combination of conditions acted to offset several climate patterns that historically have produced active hurricane seasons. As a result, we did not see the large numbers of hurricanes that typically accompany these climate patterns.†

A total of 13 named storms formed in the Atlantic basin this year, NOAA reports, but only two, Ingrid and Humberto, became hurricanes. Neither of these storms became a major hurricane (Category 3, winds of 111-129 mph and above).

Although the number of named storms was above the average of 12, the numbers of hurricanes and major hurricanes were well below their averages of six and three, respectively.

Meanwhile, the Insurance Information Institute (I.I.I.) and the Florida Insurance Council (FIC) remind us that while Florida has escaped hurricane damage for eight consecutive years, insurers are prepared for the state’s severe weather history to repeat itself.

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

Residual Property Market: Overall Exposures Stabilize Somewhat

While the size of the residual property market in hurricane-exposed states in 2012 declined from the peak in exposure value and policy counts seen in 2011, the market overall remains at near-record levels, the Insurance Information Institute (I.I.I.) says.

In an updated report Residual Market Property Plans: From Markets of Last Resort to Markets of First Choice, the I.I.I. notes that exposure to loss in the residual property market totaled $818.1 billion in 2012 with total policies in-force of 3.23 million.

This compares with total exposure to loss of $884.7 billion and total policies in-force of 3.3 million in 2011.

The I.I.I. notes that today, overall exposures in the residual property market appear to have stabilized somewhat and many of the plans are underwriting profitably.

Legislative reform passed in some of the most at-risk markets, for example the state of Florida, has contributed to an improvement in the overall financial position of the plans, it says.

Diminished hurricane activity in recent years in areas like Florida has been another positive factor.

The I.I.I. warns:

But, 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.†

Despite attempts by certain states to reduce the size of their plans, the fact of the matter is that this market of last resort remains the market of first choice for many vulnerable, high-risk coastal properties, the I.I.I. says.