Category Archives: Catastrophes

Mobile claims units are on the ground in Panama City to assist insurance customers impacted by Hurricane Michael

Earlier in the week, Lynne McChristian, our I.I.I. representative based in Tallahassee, wrote about her  life in the aftermath of Hurricane Michael. Today she returns with a follow-up post.

 By Lynne McChristian

Tallahassee, FL – We were six days without power; it felt longer. Two back-to-back days of record-breaking October temperatures peaking at 90 degrees. The generator was a godsend, even if it was not powering air conditioning, only the refrigerator, an oxygen concentrator for my ailing mother, and random lights. I was trying to keep only one light on at a time to minimize the number of gasoline refills required for the generator.

At dusk, however, it became too dim for mom to navigate the house, so we flipped on more lights – and that meant refilling the generator every 8-10 hours. It ran out of gas at approximately 2:30 a.m. two nights in a row. The first night, I gassed it up in the pitch darkness with a camping light resting on the hood of my car. The second night the generator sat silent, to be refilled at daylight.

I highly recommend having a portable generator ready in advance, rather than waiting (as I did) until you experience two days without power. Here are a few models that FEMA recommends.

On Monday, I drove to Panama City to connect with insurers, many of whom had been on the scene since Sunday. Fleets of insurance company mobile claims units were in multiple places in the area, including a Lowe’s parking lot where claims adjusters from Allstate, USAA and Met Life were helping people start the insurance claims process.

Insurance claim checks were being written on the spot to storm victims for preliminary damage and for additional living expenses. I tried to drive further into town to tour the most severely damaged areas, but traffic was at a crawl. Perhaps the traffic snarl was a combination of residents trying to get back to their homes, those coming to render aid – and the curious. It felt more chaotic as fire trucks and ambulances, law enforcement vehicles and Florida Highway Patrol escorts for utility trucks were splitting through traffic and edging along the shoulder of the road. It was clear the area was still in disaster response mode, not recovery.

Panama City Beach is a tourist area about 10 miles Panama City. On Monday it was a ghost town. Beach Front Road had blocks of mainly empty hotels, closed shops, shuttered amusements, and an occasional restaurant serving meals mainly on their outside patios. It was eerie. Bay County instituted a curfew from 6 p.m. to 6 a.m.

Back in Tallahassee, 95 percent of residents had power by Tuesday. This city known for its tree-shaded canopy roads has a great deal of that canopy lying flat alongside the road, waiting for crews to haul it away. In areas hardest hit by Hurricane Michael, the road to normalcy will be a long one. Insurers are serving policyholders throughout the affected regions – to help people recover and rebuild.

Lynne McChristian, is I.I.I.’s Florida Representative, and Assistant Lecturer and Executive Director of the Center for Risk Management Education & Research at Florida State University’s College of Business.

Hurricane Michael: The top-10 insurers in impacted states

Hurricane Michael is nearing landfall on the Florida Gulf Coast on Wednesday October 10. The storm is bringing damaging wind gusts and flooding to Florida and Alabama, where a state of emergency has been declared, and heavy rains from the storm are expected in the Carolinas and Georgia.

Preliminary estimates from CoreLogic® show that 57,002 homes in the Florida Gulf Coast are at potential risk of storm surge damage from Hurricane Michael based on its projected Category 3 status at landfall. The total reconstruction cost value of these homes is approximately $13.4 billion. This is likely to change as the storm develops.

I.I.I.’s Hurricane Fact Files for Florida, Alabama, Georgia and the Carolinas include the top 10 property insurers for each state.

Hurricane Michael: Dos and Don’ts

be safe out there.

If you live in the projected path of Hurricane Michael, you should be prepping your home and finalizing your emergency and evacuation plans. The storm has grown to Category 2 – and there are concerns that it’ll be a Category 3 by landfall.  

Here are some Dos and Don’ts to consider for prepping and riding out the storm.  

Don’t: 

  • Don’t go outside during the storm. This is a no-brainer. Even a Category 1 hurricane can reach sustained winds of 74 mph. Category 5 winds are over 156 mph. Wind speeds like this can turn even small debris into deadly missiles. And don’t be fooled by the eye of the storm – there will be a period of calm before the hurricane force winds return from the opposite direction.  
  • Don’t grill indoors. If your power goes out, don’t be tempted to throw some steaks onto a grill indoors. Charcoal or gas grills can release deadly levels of carbon monoxide.
  • Don’t drink non-bottled or untreated water. Flood waters are often filled with bacteria and other contaminants – including sewage. Don’t drink tap water – and don’t drink any water exposed to flood water, including bottled water. The FDA has tips on how to make your tap water safe to drink.
  • Don’t drink alcohol. I repeat: Don’t drink alcohol during a hurricane. You never know when you will need to evacuate at a moment’s notice or deal with a life-threatening emergency. You’re going to want all your wits about you while the hurricane is raging – lives could depend on it, yours included. That’s why some jurisdictions will ban alcohol sales prior to a hurricane.  

Do: 

  • Do stock up on lots of water. The CDC recommends at least 5 gallons of water per person. You may also want to buy iodine tablets to clean drinking water.  
  • Do make sure you have more to eat than chips and salsa. Or bread, for that matter – you’re going to want to have lots of non-perishables with nutritional value, especially canned foods. A minimum 3 to 5-day supply per person is recommended. 
  • Do prepare your house properly. Clear your yard of furniture or anything else that could blow away. Cover your windows and doors using storm shutters or plywood – and stay away from windows and doors during the storm, if you can. Make sure your carbon dioxide detector has enough battery life to prevent CO poisoning. (Check out a longer list for house prep here.) 
  • Do be responsible and prepare for the worst. Make sure you have emergency and evacuation plans in place before the storm hits. Communicate these plans to everyone at your house. Find out where the nearest storm shelter is. Keep track of the storm. Have flashlights and extra batteries ready. Buy a first aid kit. Ready.gov has more advice here 

These are not exhaustive lists. Make sure to check governmental information for help on prepping for a hurricane. And be safe out there. Hurricanes are not a joke.

Is this your boat?

In New Bern, North Carolina, a coastal town hit hard by Hurricane Florence, the storm surge deposited a stray sailboat in a homeowner’s back yard. President Trump’s offhand remark that the homeowner “got a nice boat out of the deal” was the subject of some derision. However, the homeowner may in fact be the new owner of the boat since North Carolina precedent allows an owner to walk away from a vessel rendering it abandoned private property.

A recent Financial Times article, takes a deep dive into the potential implications for the homeowner of becoming the unintentional owner of the CSY 44 sailboat. The boat is likely to be heavily damaged and in need of salvage. Since the boat’s original owner is not required to carry insurance, paying for salvage or just getting the boat removed from their property would be the homeowners’ responsibility.

Homeowners insurance could cover some of the costs, but the article notes that the homeowner is likely to hand over the title over to a professional salvor as payment for having the boat removed.

Insurance consortium offers geospatial intelligence

Aircraft carrying sophisticated image sensors are flying over the Carolinas this week to gather high quality photographs of areas impacted by Hurricane Florence.

Image of damage on Emerald Isle NC. This was one of the first areas that GIC flew over earlier this week.

Within 24 hours of capture, the images will be published online to provide State Emergency Operation Centers with high-resolution representations of disaster areas. The images will be 10 to 15 times better than satellite imagery.

The images are captured by the Geospatial Intelligence Center (GIC), a first-of-its-kind consortium  formed by the National Insurance Crime Bureau (NICB), former founders of Microsoft Bing Maps (now Vexcel Imaging), and several insurers.

GIC’s response efforts proved critical in 2017, when it provided unprecedented access to post-disaster aerials over Texas, Florida, Puerto Rico and the U.S. Virgin Islands – covering larger areas than any other response to date.

You Need Flood Insurance

Homes under water after Hurricane Harvey.

We talk a lot about flood insurance at I.I.I. for at least two good reasons:

  • It’s the most common and costly natural disaster in the United States, with billions of economic losses every year. According to the National Flood Insurance Program (NFIP), 90 percent of natural disasters in the U.S. involve flooding.
  • A 2016 I.I.I. survey found that 43 percent of US homeowners incorrectly think that heavy rain flooding is covered under their homeowners insurance – and only 12 percent had flood insurance.

Floods happen. Regularly. Even if you’re not in a flood zone – and even if you’re not usually in the path of a hurricane. If your home gets flooded, it will be a financial and emotional nightmare: FEMA argues that only 1 inch of water can cause $25,000 of damage to your home.

Your homeowners insurance won’t cover floods: If you don’t have flood insurance for your home, you probably aren’t covered under your homeowners or renters policies because flood risks used to be considered uninsurable.

To address this lack of coverage, the National Flood Insurance Program (NFIP) was created back in the 1960s. The NFIP is a federal program that provides flood insurance to participating communities. If your community participates in the program, you can often purchase insurance through a private insurer that handles policies and claims on behalf of the NFIP.

Private insurers have also recently begun offering flood insurance outside of the NFIP, as new modeling techniques have helped them get a better handle on the risks and costs.

Flood insurance will usually cover physical losses to your home caused by floods or flood-related events, like erosion – with some limitations (trees and fences aren’t covered, for example). You can also buy coverage for the contents inside your home, making flood insurance a crucial tool to help you get back on your feet.

Because disaster assistance won’t be enough: disaster assistance is often only available if you live in a declared disaster area. And even if you are, the FEMA disaster grant is only about $5,000 per household, a fraction of the average flood insurance claim of $30,000.

Flood insurance pays whether you’re in a declared disaster zone or not.

To learn more about how flood insurance works, see our resources here at I.I.I.:

Hurricane Dos and Don’ts

If you live in the projected path of Hurricane Florence, you should be prepping your home and finalizing your emergency and evacuation plans.  

Heavy rain and wind storm at a beach front condo property.

Here are some Dos and Don’ts to consider for prepping and riding out the storm.  

Don’t: 

  • Don’t go outside during the storm. This is a no-brainer. Even a category 1 hurricane can reach sustained winds of 74 mph. Category 5 winds are over 156 mph. Wind speeds like this can turn even small debris into deadly missiles. And don’t be fooled by the eye of the storm – there will be a period of calm before the hurricane force winds return from the opposite direction.
  • Don’t grill indoors. If your power goes out, don’t be tempted to throw some steaks onto a grill indoors. Charcoal or gas grills can release deadly levels of carbon monoxide.
  • Don’t drink non-bottled or untreated water. Flood waters are often filled with bacteria and other contaminants – including sewage. Don’t drink tap water – and don’t drink any water exposed to flood water, including bottled water. The FDA has tips on how to make your tap water safe to drink.
  • Don’t drink alcohol. I repeat: Don’t drink alcohol during a hurricane. You never know when you will need to evacuate at a moment’s notice or deal with a life-threatening emergency. You’re going to want all your wits about you while the hurricane is raging – lives could depend on it, yours included. That’s why some jurisdictions will ban alcohol sales prior to a hurricane.  

Do: 

  • Do stock up on lots of water. The CDC recommends at least 5 gallons of water per person. You may also want to buy iodine tablets to clean drinking water.  
  • Do make sure you have more to eat than chips and salsa. Or bread, for that matter – you’re going to want to have lots of non-perishables with nutritional value, especially canned foods. A minimum 3 to 5-day supply per person is recommended.
  • Do prepare your house properly. Clear your yard of furniture or anything else that could blow away. Cover your windows and doors using storm shutters or plywood – and stay away from windows and doors during the storm, if you can. Make sure your carbon dioxide detector has enough battery life to prevent CO poisoning. (Check out a longer list for house prep here. I.I.I. also recently gave some advice on preparing your home.)
  • Do be responsible and prepare for the worst. Make sure you have emergency and evacuation plans in place before the storm hits. Communicate these plans to everyone at your house. Find out where the nearest storm shelter is. Keep track of the storm. Have flashlights and extra batteries ready. Buy a first aid kit. Ready.gov has more advice here 

These are not exhaustive lists. Make sure to check governmental information for help on prepping for a hurricane. And be safe out there. Hurricanes are not a joke. 

First ever flood risk catastrophe bond launched

On July 16, FEMA launched its first catastrophe bond to transfer risk from the National Flood Insurance Program (NFIP) to the capital markets, reports the Artemis blog. This will be the first catastrophe bond to solely provide reinsurance coverage for flood risks.

FEMA is seeking $275 million of reinsurance protection from a FloodSmart Re Ltd. (Series 2018-1) issuance. FloodSmart Re, a Bermuda domiciled special purpose insurance vehicle, will seek to issue two tranches of notes that will be sold to insurance linked securities funds to collateralize underlying reinsurance agreements to cover a portion of the National Flood Insurance Program (NFIP) U.S. flood exposure.

The transaction will cover NFIP losses from flood events that are directly or indirectly caused by a named storm event impacting the United States and also Puerto Rico, U.S.  Virgin Islands and District of Columbia.

Fitch: P/C Insurers Financially Prepared for Hurricane Season

Via Business Insurance:

U.S. insurers are well prepared at the start of the 2018 hurricane season to withstand a significant catastrophe this year after suffering through last year’s volatile hurricane season, according to Fitch Ratings Inc.

Fitch cited a 7.5 percent increase in surplus last year, to a record $765 billion.

Surplus grew thanks to healthy investment gains, Fitch noted, which more than offset hurricane-driven underwriting losses. U.S. insurers ceded a significant portion of catastrophe losses to offshore reinsurers and alternative capital. And much of the flood loss in the Houston area from Hurricane Harveywere borne by the National Flood Insurance Program.

The heavy reinsurance losses did cause the bottoming out of rates in property and catastrophe reinsurance, Fitch indicated, but increases were “not to the degree that many market participants had anticipated.”

Updated 2018 Atlantic Hurricane Season Outlook: Cooler Atlantic Temperatures Could Lead to Below-Average to Near-Average Hurricane Season

Special to the Triple-I Blog

by Philip Klotzbach,Ph.D,
Research Scientist, Department of Atmospheric Science, Colorado State University and I.I.I. Nonresident Scholar

Colorado State University (CSU) has just updated their outlook for the 2018 Atlantic hurricane season, and is now calling for a near-average season with a total of 14 named storms, six hurricanes and two major hurricanes (maximum sustained winds of 111 miles per hour or greater; Category 3-5 on the Saffir-Simpson Wind Scale) (Figure 1).  This prediction is a slight lowering from their initial outlook in early April which called for 14 named storms, seven hurricanes and three major hurricanes.  Accumulated Cyclone Energy (ACE) and Net Tropical Cyclone (NTC) activity are integrated metrics that take into account the frequency, intensity and duration of storms.

Figure 1: May 31, 2018 outlook for the upcoming Atlantic hurricane season

CSU’s meteorological team uses a statistical model as one of its primary outlook tools.  This methodology applies historical oceanic and atmospheric data to find predictors that were effective in forecasting previous years’ hurricane activity. Based on data dating back to 1982, this model has shown consistent accuracy. (Figure 2)  Statistical forecast for 2018 is calling for a below-average season.

Figure 2: Accuracy of June statistical forecast model at predicting historical Atlantic hurricane activity (since 1982)

CSU also employs an analog approach, which uses historical data from past years with  conditions that are most similar to those currently observed (as of May 31, 2018).  The team also forecasts projected conditions during 2018 peak hurricane season (August-October) by looking at historical data from years with similar August-October conditions.

This approach yields a similar outlook of below-average to near-average sea surface temperatures (SSTs) in the tropical Atlantic and near-average sea surface temperatures in the eastern and central Pacific.  The average of the four analog seasons calls for a near-average season. (Figure 3)

Figure 3: Analog predictors used in the May 31, 2018 seasonal forecast

CSU does not anticipate a significant El Niño event for the peak of the Atlantic hurricane season.  At this point, the meteorological team believes that the most likely outcome is neutral conditions for the next several months.  El Niños tend to reduce Atlantic hurricane activity through increases in upper-level winds that tear apart hurricanes as they are trying to develop.  Most of the dynamical and statistical model guidance agrees with this assessment and calls for neutral conditions for the next several months. (Figure 4)

Figure 4: Statistical and dynamical model guidance for El Niño

Most models are calling for neutral conditions for August-October, as highlighted by the black arrow. (Figure courtesy of International Research Institute for Climate and Society.)

The primary reason for a reduced seasonal forecast (compared with earlier 2018 outlook), is due to anomalous cooling of the tropical Atlantic over the past couple of months.  As shown in Figure 5. most of the Atlantic right now is quite a bit cooler than usual. In addition to providing less fuel for storms, a cooler tropical Atlantic is also associated with a more stable and drier atmosphere as well as higher pressure—all conditions that tend to suppress Atlantic hurricane activity.

Figure 5: Current SST anomalies in the North Atlantic.  SSTs are much cooler than normal across the entire tropical Atlantic

The most important thing to note with all seasonal forecasts is that they predict basinwide activity and not individual landfall events.  However, regardless of what the seasonal forecast says, it only takes one storm near you to make it an active season.  Therefore, coastal residents are urged to have a plan in place now before the hurricane season ramps up over the next couple of months.

Extra: If you live in a hurricane-prone region, your homeowners insurance policy may have a separate hurricane deductible. This infographic explains what you need to know.