As we approach the peak of hurricane season, catastrophe modeler RMS has warned that storm surge poses a greater risk than hurricane wind.
RMS says its updated North American hurricane model shows there is a 20 percent chance that storm surge loss will be greater than wind loss for any U.S. hurricane that makes landfall. AndÂ for theÂ northeast coast of the U.S. the risk is even higher.
Dr. Claire Souch, vice president, model solutions at RMS says:
Our model shows there is a 20 percent chance that storm surge loss will be greater than wind loss for any U.S. hurricane that makes landfall, which rises to almost 40 percent along the northeast coast of the United States â€“ this is a risk the market can no longer afford to ignore.â€
RMSâ€™ updated North Atlantic hurricane model suite includes the ability to fully quantify the risk from catastrophic hurricane-driven storm surge.
An earlier paper by RMS on Superstorm Sandy made the point that storm surge loss can drive more insurance loss than hurricane wind.
In the paper RMS noted that while Sandy was not even classified as a hurricane at landfall, it caused a Category 2 storm surge in New York City:
This is not the first time that storm surge has had a dominant effect. It was responsible for more than half of the total loss from 2005â€™s Hurricane Katrina, which was a Category 3 storm at landfall, but had a Category 5 equivalent storm surge.â€
Recent analysis by CoreLogic estimates that more than 4.2 million U.S. residential properties are exposed to storm-surge risk valued at roughly $1.1 trillion, with more than $658 billion of that risk concentrated in 10 major metro areas.
According to I.I.I. facts and stats on flood insurance, Hurricane Sandy was the second costliest U.S. flood, based on National Flood Insurance Program (NFIP) payouts as of July 12, 2013.
A new report from CoreLogic underscores just how important a purchase of flood insurance may be to homeowners, especially those living in the Northeast.
The report reveals that over four million homes in the U.S. along the Atlantic and Gulf Coasts are at risk of hurricane-driven storm-surge damage, with more than $700 billion in total property exposure.
In the Atlantic coast region alone, there are around 2.2 million homes at risk, valued at more than $500 billion. Total exposure along the Gulf Coast is nearly $200 billion, with just under 1.8 million homes at risk for potential storm-surge damage.
What this means is that there are millions of homeowners living outside of FEMA designated flood zones that might still be in an area susceptible to coastal storm-surge flooding.
CoreLogic makes the point that FEMA flood zones define areas at risk for fresh-water flooding, which is an entirely different hazard than hurricane-driven storm surge.
Extensive areas along both coasts are actually vulnerable to storm surge, yet not located within designated FEMA flood zonesâ€”and therefore homeowners are not required to purchase flood insurance.â€
It goes on:
Since homeownerâ€™s insurance excludes flood losses from either fresh or salt water, homeowners who are not located in FEMA flood zones but are in high-risk surge zones have not historically considerebuying National Flood Insurance Program (NFIP) coverage for their properties.â€
To illustrate its point CoreLogic compared the number of homes in surge inundation zones against those located in both surge and FEMA flood zones for each of 14 metro areas.
For example, of 463,844 total properties exposed to flood or surge inundation in the New York/Northern New Jersey/Long Island metro area, 68.1 percent are located in a surge zone, but only 1.9 percent are located in a FEMA flood zone, while 30.1 percent are located in both a flood zone and a surge zone.
Hurricane Irene in 2011 showed the level of damage that even a weak storm could cause, but CoreLogic estimates the storm surge from a Category 4 storm hitting New York City and Long Island could cause damage of nearly $168 billion.
An I.I.I. chart shows that the top 10 most costly flood events in the U.S. ranked by NFIP payouts are associated with hurricanes or tropical storms.