Category Archives: Disaster Preparedness

Above-average 2021 Atlantic hurricane season predicted

Colorado State University (CSU) hurricane researchers predict an above-average Atlantic hurricane season in 2021, citing the likely absence of El Niño as a primary factor. El Niño tends to increase upper-level westerly winds across the Caribbean into the tropical Atlantic, tearing apart hurricanes as they try to form.

The CSU Tropical Meteorology Project team, led by Triple-I non-resident scholar Dr. Phil Klotzbach, predicts 17 named storms during the 2021 Atlantic hurricane season.

Of those, the researchers expect eight to become hurricanes and four to reach major hurricane strength (Saffir/Simpson category 3-4-5) with sustained winds of 111 miles per hour or greater.

An average season has 12 named storms, six hurricanes and three major hurricanes.

The 2021 hurricane season, which runs from June 1 to November 30, follows a record-breaking 2020 season. The team expects the 2021 hurricane activity to be about 140 percent of the average season. By comparison, 2020’s hurricane activity was about 170 percent of the average season. The 2020 hurricane season had six landfalling continental US hurricanes, including Category 4 Hurricane Laura, which battered southwestern Louisiana.

So far, the 2021 hurricane season is exhibiting characteristics similar to 1996, 2001, 2008, 2011 and 2017. “All of our analog seasons had above-average Atlantic hurricane activity, with 1996 and 2017 being extremely active seasons,” said Klotzbach.

The report also includes the probability of major hurricanes making landfall:

• 69 percent for the entire U.S. coastline (average for the last century is 52 percent)
• 45 percent for the U.S. East Coast including the Florida peninsula (average for the last century is 31 percent)
• 44 percent for the Gulf Coast from the Florida panhandle westward to Brownsville (average for the last century is 30 percent)
• 58 percent for the Caribbean (average for the last century is 42 percent)

As always, Dr. Klotzbach caution coastal residents to take proper precautions as “it only takes one storm near you to make it an active season.”

The full forecast can be accessed on CSU’s website.

FEMA’s New Approach
to Flood Risk Will Make Insurance Program Fairer

The Federal Emergency Management Agency (FEMA) last week unveiled details of Risk Rating 2.0 – its plan to modernize the National Flood Insurance Program (NFIP) to make it fairer and more sustainable.

The changes measuring flood danger differently – gauging properties’ specific risks and replacement costs, rather than simply whether they sit in a FEMA-designated “flood zone.”  FEMA officials said this would end a system in which low-value homes effectively subsidize insurance for high-value homes.

Despite concerns that Risk Rating 2.0 would lead to huge premium increases, NFIP Senior Executive David Maurstad said 23 percent of policyholders will see “immediate decreases,” 66 percent will see an “average of zero to $10 a month” in additional premiums, and 11% will pay higher bills, some more than $20 a month.

NFIP owes the U.S. Treasury $20.5 billion after a series of hurricanes that resulted in claims costs greater than the premiums FEMA received.

“Our current system is just fundamentally not working for us anymore,” Maurstad said, adding that the new approach would result in a “more equitable, accurate and individualized NFIP.”

Lawmakers in coastal states like Florida worried about the sudden impact of higher rates – more accurately reflecting the greater flood risk in those areas – on their constituents.  FEMA has ameliorated those concerns by making new rates apply only to new policies when the program takes effect in October 2021. Homeowners and businesses with existing flood policies won’t see a rate change until April 2022.

FEMA said high-value homes in high-risk areas would experience seeing the largest increases. FEMA expects their rate increases would take effect over a 10-15 year “glide path” as they continue to be protected by an 18 percent annual cap on premium increases that is written into law.

The Union of Concerned Scientists (UCS) quickly weighed in on the plan.

“The system we’ve used to calculate flood risk, and in turn insurance policy premiums, no longer holds water,” said Shana Udvardy, a UCS climate resilience analyst. “Outdated maps have left homeowners ill-prepared for possible disasters. Risk Rating 2.0 could go a long way in helping homeowners better understand their risk, ensuring they can make informed decisions to protect themselves and their property.”

“It is great to see that FEMA is moving forward with Risk Rating 2.0, which is so badly needed,” said Matthew Eby, executive director of the First Street Foundation, a climate and technology non-profit that has done its own extensive flood-mapping. A recent First Street analysis found the United States to be woefully underprepared for damaging floods.

It identified “around 1.7 times the number of properties as having substantial risk,” compared with FEMA’s flood zone designation. “This equates to a total of 14.6 million properties across the country at substantial risk, of which 5.9 million property owners are currently unaware of or underestimating the risk they face.”

Some Experts Suggest Retiring the Name “Tornado Alley”

(Photo by Robert Laberge/Getty Images).

What’s in a name? If you live in “Tornado Alley,” there might be a lot – or less than you might imagine.

The designation refers to a stretch of geography running from Texas and Oklahoma through Nebraska and Kansas (think Dorothy and Toto, their house wrenched from the parched, flat earth and spinning toward Oz). It first came into use almost 70 years ago, when two atmospheric scientists used it as the title for a research project on tornadoes.

But, as the Washington Post recently reported, some experts believe the name is misleading and should be retired.

“To be honest, I hate the term,” said Stephen Strader, an atmospheric scientist at Villanova University specializing in severe weather risk mitigation. “What people need to understand is that if you live east of the continental divide, tornadoes can affect you.”

Research has shown tornadoes are just as common in the Deep South as they are on the Plains, and there is no real drop in tornadoes as one exits Tornado Alley to the east.

“Tornadoes on the Plains are often elegant and foreboding,” the Post says, “some reliably appearing as high-contrast funnels that pose over vacant farmland for hordes of storm chasers and photographers. The Plains are like a giant meteorological classroom, an open laboratory; its students flock to it every year.”

Which explains why tornadoes we see on TV have that “classic” funnel look – and what we are shown most often comes to be thought of as most “typical.”

In the Deep South, most tornadoes are, as the Post puts it, “rain-wrapped and shrouded in low clouds, impossible to see.” More than a third of all tornadoes in Alabama and Mississippi occur at night, making them twice as likely to be deadly.

But, because they don’t match the popular perception of what a tornado is like and are hard to capture, they seldom appear on TV.

Why does it matter?

Because how we name things influences how we think about them, and how we think about them influences policymaking and individual behavior.

As we reported last year, tornado reports are on the rise – but is that because of changes in weather and climate? Or improved reporting related to technology and the growing popularity of “storm chasing”? Damage from tornadoes and other types of natural disasters is becoming more costly – is that because storms are becoming more frequent and severe? Or because more people are moving into disaster-prone areas?

If you’re not located in Tornado Alley, does it make sense to invest in mitigating tornado-related risks? Probably as much as it does to have flood insurance, even if you’re not in a FEMA-designated flood zone, or anticipate and prepare for winter storms in Texas.

For more information:

Severe Convective Storms: Evolving risks call for innovation to reduce costs, drive resilience

Floods, Freezing, Other Extreme Weather Highlight Need for Planning and Insurance

Recent flooding in Kentucky “is going to be one that goes into the record books,” the state’s Emergency Management Director Michael Dossett said in a news conference this week. At least 49 counties had issued disaster declarations following days of rain that dumped four to seven inches across a wide stretch of the state and pushed rivers to levels not seen for decades.

Dossett and Gov. Andy Beshear said the state had been in contact with the Federal Emergency Management Agency (FEMA) to seek federal aid and that assessments would be made next week for both the flooding and an ice storm last week. Damage assessments for the ice storm had been put on hold by the floods.

Extreme weather events, like these floods and last month’s winter storm that left dozens of Texans dead, millions without power, and nearly 15 million with water issues, underscore the importance of resilience planning and of homeowners and businesses having appropriate insurance coverage.

Flood protection gap

About 90 percent of all U.S. natural disasters involve flooding.  Whether related to coastal and inland inundations due to hurricanes, extreme rainfall, snowmelt, mudflows, or other events, floods cause billions of dollars in losses each year. According to FEMA, one inch of flood water can cause as much as $25,000 in damage to a home.

But direct economic losses are only part of the picture. Human costs are enormous, and it can take families, businesses, and communities years to recover.

Flood damage is excluded from coverage under standard homeowners and renters insurance policies. However, coverage is available from the National Flood Insurance Program (NFIP) and from a growing number of private insurers.

Many people believe they don’t need flood insurance if the bank providing their mortgage doesn’t require it; others assume their homeowners insurance covers flood damage; others think they cannot afford it.

As a result, a substantial protection gap exists.

A recent analysis by the nonprofit First Street Foundation found the United States to be woefully underprepared for damaging floods. It identified “around 1.7 times the number of properties as having substantial risk,” compared with FEMA’s flood zone designation.

“This equates to a total of 14.6 million properties across the country at substantial risk, of which 5.9 million property owners are currently unaware of or underestimating the risk they face,” the report said.

Current system unsustainable

The NFIP owes more than $20.5 billion to the U.S. Treasury, leaving $9.9 billion in borrowing authority from a $30.43 billion limit in law. This debt is serviced by the NFIP and interest is paid through premium revenues. With flood losses on the rise, the current system is not sustainable without changes.

In December, FEMA proposed “substantively” revising the “estimated cost of assistance” factor the agency uses to review governors’ requests for a federal disaster declaration to “more accurately assess the disaster response capabilities” of the states, District of Columbia and U.S. territories. Its Risk Rating 2.0 initiative, set for implementation in October, aims to make flood insurance rates more accurately reflect insured properties’ individual flood risk.

 In other words, the federal government will likely ask states, municipalities, and some policyholders to shoulder more of the cost of recovering from natural catastrophes.

Complex challenges require multi-pronged approaches to address them, and FEMA and other federal and state agencies are working with the private sector to close the flood protection gap. In the near term, the most cost-effective way for families and businesses to mitigate flood risk is insurance.

If it can rain where you are, it can flood where you are. As Daniel Kaniewski, managing director for public sector innovation at Marsh & McLennan and former deputy administrator for resilience at FEMA, put it during a Triple-I webinar last year: “Any home can flood. Even if you’re well outside a floodplain, get flood insurance. Whether you’re a homeowner or a renter or a businessowner — get flood insurance.”

Texas Winter Storm Costs Raise Extreme-Weather Flags for States, Localities

Last month’s winter storm that left dozens of Texans dead, millions without power, and nearly 15 million with water issues could wind up being the costliest disaster in state history.

Disaster-modeling firm AIR Worldwide says claims volume will likely be significant and, with average claims severity values of $15,000 for residential risks and $30,000 for commercial risks, insured losses “appear likely to exceed $10 billion.”

AIR says several variables could drive the loss well above that amount, including:

  • A higher-than-expected rate of claims among those risks affected by prolonged power outage,
  • Whether utility service interruption coverages pay out;
  • Larger-than-expected impacts from demand surge,
  • Government intervention, and
  • Whether claims related to mold damage start to emerge as a significant source of loss.

FitchRatings says the widespread scale and claims volume of the event could drive ultimate insured losses as high as $20 billion. For context, the state’s insured losses related to Hurricane Harvey were about $20 billion, according to the Texas Department of Insurance. The deadly 2017 hurricane devastated the Gulf Coast region. Last month’s winter storm affected every region of the state.

“All 254 counties will have been impacted in some way by the freeze,” said Lee Loftis, director of government affairs for the Independent Insurance Agents of Texas. “That is just unheard of.”

All Texas counties have received state disaster declarations by Gov. Greg Abbott, opening them up to additional state assistance. But many rural counties are currently excluded from President Biden’s major disaster declaration.

State and local officials say the federal government moved swiftly to approve declarations for 108 counties and that more are likely coming as reports of damage mount. Eighteen of the state’s 20 most populous counties were included in the declarations. But for the 146 counties — many of them rural — the wait is nerve wracking.

Officials say it’s because those counties lack data on damages. Nim Kidd, chief of the Texas Division of Emergency Management, said the state is urging residents to report their property damage through an online damage assessment tool. State officials will report that damage to FEMA in hopes it will lead to more counties being added to the major disaster declaration.

Earl Armstrong, a FEMA spokesperson, said in a statement to the Texas Tribune that homeowners and renters who don’t live in a disaster-designated county should file a claim with their insurer, document damage to their home from the storm, and keep receipts for all expenses related to repairs.

Anomalous as the Texas winter storm may have been, it is a salient data point that all states and municipalities should take to heart in their disaster planning. In December, FEMA proposed “substantively” revising the “estimated cost of assistance” factor the agency uses to review governors’ requests for a federal disaster declaration to “more accurately assess the disaster response capabilities” of the states, District of Columbia and U.S. territories.

In other words, the federal government will likely ask states and municipalities to shoulder more of the cost of recovering from natural catastrophes – making it even more important for every state to prepare for and insure against events that might have seemed unthinkable not so long ago.

And as Texas and other affected states recover, they still have 2021’s severe convective storm and hurricane seasons ahead of them.

Study Quantifies Future Climate Change Impact
on Flood Losses

A new study from the nonprofit First Street Foundation projects the impact climate change may have on U.S. flood losses.

The report – The Cost of Climate: America’s Growing Flood Risk –finds that, when adjusting for the long-term impact of a changing climate, nearly 4.3 million homes have “substantial” flood risk that would result in financial loss.

“If all of these homes were to insure against flood risk through the National Flood Insurance Program (NFIP),” the report continues, “the rates would need to increase 4.5 times to cover the estimated risk in 2021, and 7.2 times to cover the growing risk by 2051.”

Last year, the foundation released a report indicating that nearly 6 million U.S. properties could be at greater risk of flooding than currently indicated by Federal Emergency Management Agency (FEMA) flood maps.

The new report is particularly resonant as FEMA prepares to implement Risk Rating 2.0, an initiative to make flood insurance pricing more representative of each policyholder’s exposure and help customers better understand their risks and the importance of having flood coverage. It plans to accomplish this by using industry best practices and technology to deliver rates that “are fair, make sense, are easier to understand, and better reflect a property’s unique flood risk.

Implementation of Risk Rating 2.0 is scheduled to begin in October 2021.

Since homeowners who have federally backed mortgages and reside in FEMA-designated Special Flood Hazard Areas (SFHA) are required to buy flood insurance, the First Street data serve as an example of an early indicator of who could be most affected by risk-based rate changes in the near term and as the impacts of climate change evolve.

Potential cost consequences of expanded coverage under NFIP – or, worse, of not addressing the existing flood-protection gap – underscore the importance of a multi-pronged approach to mitigation and resilience that includes improved attention to how, where, and whether to build or rebuild and expanded availability and affordability of insurance.  

Why Do Disasters
Keep “Surprising” Us?
A Resilience Culture Would Aid Preparation

Texas in recent days has become the latest poster child for government failure to prepare for catastrophe.

A Washington Post analysis places last week’s “rolling disaster” – with more than 14 million people in 160 counties experiencing power loss and water-service disruptions due to severe winter weather – alongside the U.S. federal government’s failure to anticipate and prepare for a global pandemic.

“Other such episodes of government caught by surprise are etched in people’s memory,” the article says, citing Hurricane Katrina and the 9/11 terrorist attacks as precedents. “It is rarely the case that these disasters strike without warning…. As many government officials have said, there is little incentive and almost no political reward for investing money to head off a crisis.”

Blame is being apportioned for Texas’s failure to mitigate what now has to be recognized as an inevitable confluence of extreme weather conditions with infrastructure vulnerability. It certainly seems as if investment in a handful of cold-proofing measures for the state’s independent, lightly regulated energy system might have prevented much of the suffering.

But what about other states suffering from service disruptions and their toll in human pain? And what about the next “unforeseen” catastrophe?

Instead of pointing fingers for actions not taken, it might be more productive to focus on developing a national and global culture of resilience; communicating the objective value of understanding, anticipating, and mitigating the impact of natural and man-made risks; and taking steps in advance to promote resilience in the aftermath of events that can’t be avoided. 

This is what Triple-I, its members, and partners have been doing. Our Resilience Accelerator curates and shares data and insights from across the risk-management world with a focus on promoting resilience best practices.  Our Joint Industry Forum annually brings together insurance and risk-management leaders and subject-matter experts to explain and update anyone with an interest in risk on the latest trends, developments, and solutions. We produce webinars, hold educational town halls, and regularly engage with the news media to help inform their coverage.

We also play an active role in helping to close the oft-mentioned “skills gap” in the insurance industry.

“The risks we all face—whether natural or man-made—are top of mind for younger generations,” Triple-I CEO Sean Kevelighan said recently. “We’re beginning to see these future leaders turn to insurance. They are beginning to understand that our 350 years of history, of managing risks of all kinds, is truly a catalyst for solutions. These solutions will result in a more resilient and protected world.”

Community Catastrophe Insurance: Four Models to Boost Resilience

Many households and small businesses don’t have sufficient savings to repair and rebuild after a natural disaster. Insurance is a vital source of recovery funds, but many are uninsured or insufficiently insured. This insurance gap doesn’t just reduce their resilience; its impact can slow the recovery of entire communities.

Community-based catastrophe insurance (CBCI) – arranged by a local government, quasigovernmental body, or a community group to cover individual properties in the community – may help close the coverage gap. A recent Marsh & McLennan report looks at such arrangements and how they can promote community resilience.

In addition to improving financial recovery for communities, CBCI can provide more affordable disaster insurance coverage and could be linked directly to financing for community-level hazard mitigation. It offers multiple delivery models so officials and risk managers can explore and implement CBCI as part of an integrated risk management strategy.

Four broad institutional structures for CBCI illustrate the different roles and responsibilities of the community and other partners:

• A facilitator model

• A group policy model

• An aggregator model

• Purchase through a community captive.

In these frameworks, the community’s role and responsibility increase from lowest to highest. In the first, the community is more of a facilitator and a negotiator. In the second, it takes on a role in distribution, choosing insurance options and collecting premiums. In the third, the community plays a dual role: as the insured on a contract with a reinsurer and as the disburser of claims funds.

The fourth model harnesses an existing structure — an insurance captive — that enables the community to provide disaster policies.

“In all cases, the community could offer the coverage for a property owner to voluntarily decide to purchase, or there may be a few instances where a community would compel residents to purchase coverage,” the Marsh report says. “When coverage is voluntary, however, a community would likely need to offer purchase incentives to achieve goals of widespread take-up of the coverage.”

The report describes the four models in detail and provides a five-part roadmap for implementation.