Given the timing of Hurricane Irene, close to six years since Hurricane Katrina, itÃ¢â‚¬â„¢s inevitable that this will lead some to draw comparisons.
PropertyCasualty360.com has an interesting piece on why itÃ¢â‚¬â„¢s possible the insurance industry will face similar issues that arose with Hurricane Katrina and its wind vs. water discussion.
While itÃ¢â‚¬â„¢s too early to tell just yet what proportion of Irene damage is the result of flooding, itÃ¢â‚¬â„¢s important to reiterate that flood damage is excluded under standard homeowners, renters and commercial insurance policies.
It cites experts at the Wharton Risk Center saying that based on their analyses of NFIP data, it is very likely that many homeowners with damage from Hurricane Irene will not have purchased flood insurance even if they are required to have it.
According to Howard Kunreuther, co-director of WhartonÃ¢â‚¬â„¢s Risk Management and Decision Processes Center and cited in the article, it is also unlikely homeowners will have invested in measures to reduce losses from hurricanes.
As clean up efforts get underway on the U.S. East Coast and in the Northeast following Hurricane Irene,Ã‚ one question on many peoplesÃ¢â‚¬â„¢ minds is whether their insurance covers fallen trees.
The good news is that if a tree hits a home or other insured structure due to wind, standard homeowners policies provide coverage for the damage the tree does to the structure and the contents in it.
It does not matter whether or not you own the tree. If it lands on your home, you should file a claim with your insurance company, the I.I.I. says.
If a tree hits an insured structure, such as your house or garage, there is also coverage for the cost of removing the tree, generally up to about $500 to $1,000, depending on the insurer and the type of policy purchased.
The I.I.I.Ã¢â‚¬â„¢s Jeanne Salvatore has the answers to your fallen tree questions in this video:
Just to be clear, a hurricane watch means that hurricane conditions are possible within the watch area. A watch is typically issued 48 hours before the anticipated first occurrence of tropical storm-force winds.
As of 8am EDT the National Hurricane Center (NHC) reports that Irene, currently a category 2 hurricane on the Saffir-Simpson scale, is located some 375 miles south southwest of Cape Hatteras, North Carolina, and moving to the north near 14 miles per hour.
NHC says that some re-intensificaton is possible and Irene is expected to be near the threshold between Category 2 and 3 as it reaches the North Carolina coast Saturday.
As Irene heads north, an importantÃ‚ statistic is that five of the top 10 states in terms of the value of insured coastal property vulnerable to hurricanes are situated in the northeast.
New York, Massachusetts, New Jersey, Connecticut, and Maine have some of the highest insured coastal property values in the country, according to the I.I.I.
Figures compiled by catastrophe modeler AIR Worldwide show the total value of insured coastal exposure in these five states was $4.4 trillion in 2007. ThatÃ¢â‚¬â„¢s about half the $8.9 trillion value of insured coastal property in hurricane prone states as a whole.
According to the NHC, Irene’s hurricane force winds extend outward up to 40 miles and tropical storm force winds up to 205 miles from the center.
This raises an important point. Regardless of where or whether Hurricane Irene makes U.S. landfall, storm-related winds, storm surge, rainfall and surf are all potential hazards that coastal residents fromÃ‚ the CarolinasÃ‚ to MaineÃ‚ may face on land.
Over at Wunderblog, Dr. Jeff Masters yesterday warned that Irene is a potential multi-billion dollar disaster for New England and the mid-Atlantic:
Tropical storm Emily, the fifth named storm of the Atlantic hurricane season, may have dissipated for now, but itÃ¢â‚¬â„¢s important to remember that weÃ¢â‚¬â„¢re approaching the peak months for storm activity.
The Atlantic basin has already produced five tropical storms this season: Arlene, Bret, Cindy, Don and Emily. Tropical Storm Don quickly disintegrated after making landfallÃ‚ in southern Texas July 29.
The last hurricane to make landfall in the United States was Ike in 2008.
That said, inÃ‚ its just-released pre-season forecast, London-based consortium Tropical Storm Risk (TSR)Ã‚ is stickingÃ‚ to its April prediction for 14 named storms, with seven to eight hurricanes and three to four intense hurricanes (Category 3 to 5).
TSR expects the 2011 season will see activity about 25 percent above the long-term (1950-2010) norm.
London-based consortium Tropical Storm Risk is calling for 14 named storms, with seven to eight hurricanes and three to four major hurricanes. TSR forecasts Atlantic basin and U.S. landfalling tropical cyclone activity at about 25 percent above the 1950-2010 norm.
Accuweather.com Hurricane Center meteorologists are also predicting an active season for 2011, with 15 named storms, eight of which are expected to become hurricanes, with three major hurricanes. They also expect more impact on the U.S. coastline than last year.
For insurers these early forecasts give a general idea of whatÃ¢â‚¬â„¢s to come, but of course, itÃ¢â‚¬â„¢s still very early days.
Hurricane season doesn’t start for another couple of months, but recently, I.I.I. requested a chart showing the sum of all catastrophe losses since 1980, broken down by state. Insurance Services Office obliged with data from its Property Claims Services Unit. The results may surprise you:
In all, insurers have paid out nearly $380 billion in catastrophe losses (adjusted for inflation to present day dollars). Three states – Florida, Texas and Louisiana – make up more than a third of that number – driven largely by hurricanes.