Category Archives: Disaster Preparedness

Battling Fires, California Also Struggles to Keep Homeowners Insured

The Los Angeles office of the National Weather Service predicted prolonged, potentially record-setting heat and dangerous weather conditions throughout California this summer – and, some experts expect it to continue for some time beyond.

“If you like 2020, you’re going to love 2050,” said Michael Gerrard, director of Columbia University’s Sabin Center for Climate Change Law, in a recent Los Angeles Times article.

These conditions can only exacerbate this year’s atypical wildfire activity in the state. So, it should be no surprise that California is grappling with how to stop insurers from abandoning fire-prone areas, leaving countless homeowners at risk.

“Years of megafires have caused huge losses for insurance companies, a problem so severe that, last year, California temporarily banned insurers from canceling policies on some 800,000 homes in or near risky parts of the state,” The New York Times reports. “However, that ban is about to expire and can’t be renewed, and a recent plan to deal with the problem fell apart in a clash between insurers and consumer advocates.”

Insurers are widely expected to continue their retreat.

“The marketplace has largely collapsed” in high-risk areas, said Graham Knaus, executive director of the California State Association of Counties. “It’s a very large geographic area of the state that is facing this.”

California, where regulations lean toward consumer protection, is particularly challenged. The state doesn’t let insurers set premiums based on what they expect in future damages. They can only set rates based on prior losses. They also aren’t allowed to pass along reinsurance costs to policyholders – costs that are expected to rise as fire risks worsen.

State lawmakers introduced a bill to let insurers writing coverage in wildfire-prone areas incorporate climate predictions and other costs into their rate requests in return for making coverage more available and offering discounts to people who take steps to reduce their home’s vulnerability.

Insurers supported the change, as did the counties association and the union representing firefighters. But the bill faced strong opposition from consumer groups, who ultimately prevailed. Last month, the state senate stripped most of the provisions from the bill and directed the insurance commissioner to review the current rules and report back to the legislature in two years.

The legislature ended its session without acting on the revised version. Insurance Commissioner Ricardo Lara said his focus now is working with high-risk communities to reduce their wildfire risk enough that insurers will keep offering coverage without big rate increases.

“If Californians do our part to protect homes from wildfire,” Lara said, the industry should respond by agreeing to insure those homes.

Janet Ruiz, Triple-I’s director of strategic communications, said, “Insurers in California are working with legislators and the California Department of Insurance to find solutions to keep homeowners insured in wildfire risk areas. The industry supports mitigation efforts, the California FAIR Plan, and the proposed IMAP program.”

Laura Loss Estimates:
$4 Billion to $13 Billion

This blog post has been updated based on new information received since it was first published on September 4, 2020.

Hurricane Laura may have caused as little as $4 billion of insured damage or as much as $13 billion, according to early estimates.

Property information, analytics and data provider CoreLogic said residential and commercial insured losses from Hurricane Laura in Louisiana and Texas will come in at between $8 billion and $12 billion. Most of the property damage occurred in southwest Louisiana, where Laura made landfall early as a Category 4 hurricane with 150 mph winds.

Catastrophe risk modeler RMS puts the range between $9 billion and $13 billion. This includes wind and storm surge losses of between $8.5 billion and $12 billion, inland flood losses of $100 million to $400 million, and National Flood Insurance Program (NFIP) losses of $400 million to $600 million.

Catastrophe risk modeling firm Air Worldwide said it expects losses related to Laura to fall in the $4 billion to $8 billion range. The combination of the storm’s track through less-populated areas and its relatively small “Rmax” – the distance from the center of the storm to the location of the maximum winds – should keep insured losses down somewhat, the company said.

Cat risk modeler Karen Clark & Co. estimates insured onshore property losses from wind and storm surge will likely amount to $8.7 billion in the U.S. and $200 million in the Caribbean. Its estimate includes the privately insured wind and storm surge damage to residential, commercial, and industrial properties and automobiles but not losses covered by the NFIP or losses to offshore assets.

All estimates are subject to change as more information becomes available.

Hurricane Season:
More Than Wind & Water

Under the best of circumstances, the Atlantic hurricane season is a challenging time. Despite improved forecasting and analytical tools, pre-storm communication, and engineering, hurricane-related losses continue to climb.

But the 2020 season hasn’t come during the best of circumstances. This extremely active season arrived on the heels of a pandemic that hasn’t ebbed, accompanied by civil unrest and atypical wildfire activity that could draw attention and resources away from preparation and post-storm aid.

And, as if that wasn’t enough, it falls in the middle of what is arguably the most contentious, chaotic U.S. election year in modern history.

To say these new variables complicate resilience would be a gross understatement in a year whose (to use the technical insurance phrase) “general weirdness” would be difficult to overstate.

So, in a paper published today we review the current state of hurricane resilience – how forecasting, modeling, preparation, and mitigation have evolved – and how the insurance industry is working to help communities bounce back from hurricanes.

Demographics more than climate change

Nine of the 10 costliest hurricanes in U.S. history have occurred since 2004, and 2017, 2018, and 2019 were the largest back-to-back-to-back insured property loss years in U.S. history. Many would instinctively chalk up such numbers to climate change. But a careful look at the data suggests climate change isn’t the predominant driver of losses.

U.S. Census Bureau data indicate that the number of housing units in the United States increased most dramatically since 1940 in areas that are most vulnerable to weather-related damage. They also show that new homes are bigger and more expensive than in past decades.

Bigger homes full of more valuables, more cars and infrastructure in disaster-prone locales – these, more than climate trends, seem to be the dominant factors driving losses.

Not more, but wetter

Hurricanes may not be more frequent or significantly more intense due to climate change, but they seem to be getting wetter. Inland flooding has caused more deaths in the United States in the past 30 years than any other hurricane-related threat.

Early in the 2020 season, Tropical Storm Cristobal made landfall along southeastern Louisiana and triggered flash flooding as far inland as northwest Wisconsin.  

“As the atmosphere continues to warm, storms can hold more moisture and bring more rainfall,” said Triple-I non-resident scholar and Colorado State University atmospheric scientist Dr. Philip Klotzbach. This trend could be exacerbated if, as some experts expect, storms begin traveling more slowly, adding to the moisture they would pick up from the ocean and drop over land.

This is why experts we talk with say, “Get flood insurance.”

We’ve come a long way – and have further to go

Our paper also looks at the evolution of hurricane modeling and forecasting, as well as developments in preparation and mitigation.

Better data and improved modeling have made private insurers comfortable writing coverage, like flood insurance, that was previously considered “untouchable” and enabled the creation of entirely new types of insurance products.

But challenges remain. Experts disagree as to which models are best, and the proprietary nature of these models can make it hard for regulators to determine whether filed rates based on them are unfairly discriminatory.

Hurricane preparation and damage mitigation have benefited from improved communication and public planning.

“Many people still don’t evacuate the way they should,” says Todd Blachier of Church Mutual Insurance, “but states like Louisiana, Florida, Alabama and Mississippi have gotten much better in terms of shutting down inbound roads and creating one-way egress to facilitate evacuation.”

He says officials are acting much more quickly and communicating more effectively, thanks in large part to improved information from the National Oceanic and Atmospheric Administration (NOAA) and other resources.

One area in which improvements could boost resilience is building codes and standards. A recent Federal Emergency Management Agency (FEMA) study quantified the losses avoided due to buildings being constructed according to modern, hazard-resistant codes and standards. In California and Florida — two of the most catastrophe-prone states — FEMA found adopting and enforcing modern codes over the past 20 years led to a long-term average future savings of $1 billion per year for those two states combined.

Webinar: Wildfires are here—be CA wildfire ready with tips to protect property and finances

With another catastrophic wildfire season again underway in California, join this press conference to hear from fire science and insurance experts on practical steps homeowners and renters can take to reduce their risk from wildfires. Learn where to start and what actions communities need to take first to continue to adapt to wildfire and stay protected.

Register now to join experts from the American Property Casualty Insurance Association, the Triple-I, the Insurance Institute for Business Home and Safety and the National Fire Protection association on September 3, 2020, 10:00 a.m.-11:00 a.m. PT. Register now

Hurricane Laura Update: 8/27/2020

Damage reports from Hurricane Laura are coming in. Lake Charles, La., was especially hard hit, and there are reports of a chemical leak nearby.

Laura made landfall near Cameron, La., as an “extremely dangerous” Category 4 hurricane. The National Hurricane Center (NHC) said in an early-morning bulletin that Laura had weakened to a Category 3 hurricane, with rapid weakening forecast, and the storm has since been downgraded to a Category 1 as it heads northward.

“Lake Charles experienced severe wind damage but seems not to have seen the amount of storm surge that was feared,” said Triple-I non-resident scholar and Colorado State University atmospheric scientist Dr. Philip Klotzbach.  

Despite the downgrade, the hurricane still had sustained winds of more than 100 mph. Heavy rain is predicted to be widespread across the west-central Gulf Coast, with five to 10 inches falling over a broad area, and locally up to 18 inches, leading to flash flooding.

The storm is now tracking inland across western Louisiana with damaging winds and is an inland flood risk as far north and east as Arkansas and the Ohio and Tennessee valleys. 

“The threat of tornadoes today and even tomorrow also exists as the storm recurves into the Tennessee Valley,” Klotzbach said. 

Hurricane Laura set to develop into Cat 4 storm

The National Hurricane Center forecasts Hurricane Laura to reach Category 4 intensity later today.  A ‘life-threatening’ storm surge of 10 to 15 feet is predicted, one of the worst in years, along with destructive winds. The storm is poised to strike the upper Texas coast and western Louisiana.  Hurricane and storm surge warnings have been issued for much of this zone.

If you live in an area ordered to evacuate, leave now. Do not attempt to ride out the storm.  Take your insurance contact information and home inventory with you.

In an analysis based on the assumption that Hurricane Laura would come ashore on the Louisiana coast as a Category 3 storm, CoreLogic, a catastrophe modeling firm, warns that nearly 432,000 single-family and multi-family homes along the coasts of Texas and Louisiana could be damaged from storm surge. According to the analysis, Laura threatens approximately 431,810 homes with a combined reconstruction value of approximately $88.63 billion.

Said Tom Larsen, principal, insurance solutions at CoreLogic, “The coincidence of two catastrophes—a damaging hurricane season and the ongoing global pandemic—underscores the importance of the correct valuation of reconstruction cost, one of the core tenets of property insurance.”

Hurricane Watch: 8/25/2020

Tropical Storm Laura has been upgraded to a hurricane and is tracking northwest across the Gulf of Mexico.  The system is likely to make landfall Wednesday evening or Thursday morning, possibly in eastern Texas or western Louisiana. High winds, heavy rain and storm surge are expected.

If you live along the northern Gulf Coast you are encouraged to prepare now, as conditions will deteriorate during the day on Wednesday.

Please click here for preparedness tips.

Atypical Wildfire Activity? Of Course — It’s 2020

If you need any further evidence of the anomalous nature of the year 2020, you can take a look at California’s wildfires. Two of the three largest fires in California history rage across the state, alongside about 600 others, burning more than 1.3 million acres — an area about the size of Delaware — and forcing more than 100,000 people to evacuate.

Those of us who aren’t directly affected may have become jaded enough to think, “More fires in the West. That’s normal.”

But as Janet Ruiz, Triple-I’s California-based director of strategic communications, explains, “We’ve had a significant number of large wildfires since 2015, but this year is anything but normal.”

Your first clue might be the alphabet soup of names applied to this year’s blazes: LNU, CZU, SCU. You might remember Northern California’s major wildfires in recent years — the Camp Fire, the Carr Fire, Tubbs, Ferguson — and wonder why this year’s don’t have similarly straightforward names.

According to California fire officials, it’s because the number of fires has required them to be grouped together in “complexes”:

  • The LNU Lightning Complex in the northeast Bay Area, including Sonoma, Napa, Solano, and Lake counties.
  • The CZU Lightning Complex in the western and southern Bay Area, including San Mateo and Santa Cruz counties.
  • The SCU Lightning Complex in the eastern and southeastern Bay Area, including Santa Clara, Alameda and Contra Costa counties, and neighboring San Joaquin and Stanislaus counties.

“We only group fires like that when we have a lightning siege as such,” Brice Bennet, a public information officer for the California Department of Forestry and Fire Protection (Cal Fire), told the San Francisco Chronicle.

The last major lightning siege was in 2008.

“Once the fires are grouped into a complex,” the Chronicle explains, “they’re managed so fire managers can assess all the different fires within each one and share resources across the greatest need — life being first, and property second. That’s where the prefixes come in. Those monikers are geographical locators based on Cal Fire administrative unit codes.”

Ruiz explained that many of the fires since 2015 were caused by human activity, rather than nature.

“Authorities have worked hard and invested a lot of money to mitigate those causes,” she said. “Then along comes this unpredictable, unpreventable abundance of lightning strikes.”

Fewer firefighters: Thanks, COVID-19

The daunting number of blazes coincides with a reduced availability of firefighters, courtesy of the coronavirus pandemic.

“In past seasons, a lot of help came from inmates recruited to assist in firefighting,” Ruiz said. “Many of these have been released because of COVID-19 and therefore aren’t available.”

Less warning, preparation paramount

Lightning is a universal metaphor for random ill fortune, and the chaotic causation of California’s 2020 fires has affected how authorities communicate with residents about impending threats.

“Normally you’d get warnings about approaching fires, followed, if necessary, by a mandatory evacuation order,” Ruiz said. But last week, when Ruiz was evacuated, “We didn’t get an advisory – we were just told to go.”

Wisely, she and her husband keep “to go” bags near their front door and were able to leave within 10 minutes of receiving the order.

A year characterized by a global pandemic, historic civil unrest, an “extremely active” hurricane season, a destructive derecho – not to mention the more bizarre entomological offerings of murder hornets, zombie cicadas, and invasive “jumping” earthworms – is no time to forgo caution where wildfire safety is concerned.

Ruiz reminds us that this fire season is still young, and more and worse may be in store.

Further Reading:

Safeguard Your Business From Wildfires: Allianz and Triple-I Team Up on Mitigation

Wildfires and Insurance: Learn How to Prepare Financially

Facts and Stats: Wildfire

Are You Financially Prepared for a Wildfire?

Knowing Insurance Is Part of Wildfire Preparedness

Fighting Wildfires With Innovation

Laura and Marco
Set Sights on
Northern Gulf Coast

Tropical storms Laura and Marco are expected to hit the northern Gulf Coast within a few days of each other. Marco was a hurricane on Sunday but has weakened considerably due to strong southwesterly wind shear. 

While Marco’s wind threat has diminished, heavy rain of three to six inches, with small areas potentially receiving 10 inches of rainfall are possible along the north-central and northeast Gulf Coast, according to the National Hurricane Center.  Storm surge of two to four feet also is possible from Morgan City, LA, to Ocean Springs, MS.  Marco is expected to make landfall later today in southeast Louisiana.

Following close behind is Tropical Storm Laura, which forecasters say may intensify to a Category 2 hurricane by the time it makes landfall along the northwestern Gulf Coast.

Residents along the Louisiana coast were urged to prepare for hurricane conditions, and Gov. John Bel Edwards called on them to begin sheltering Sunday evening.

“If you’re in duress and need help, we’re going to get to you as soon as possible,” Edwards said at the state’s Emergency Operations Center, where officials were tracking and preparing for the storms. “But as soon as possible may be longer than it normally is.”

The National Weather Service warned Sunday that the stronger Laura could bring more significant impacts across southern Louisiana because of its potential for higher winds and storm surge and because preparing for Laura will likely be complicated by lingering impacts from Marco.

Texas Gov. Greg Abbott on Sunday declared a state of disaster for 23 counties and requested assistance from the federal government. If Laura were to make landfall in Texas, it could mark the second significant disaster during the 2020 hurricane season for Texas, following Hurricane Hanna dumping more than 15 inches of rain on South Texas in late July as the region was a deadly coronavirus hotspot. The COVID-19 pandemic remains pervasive in Texas, killing at least 200 people every day for the last three weeks, and Abbott reminded the public on Sunday to adhere to mask wearing, social distancing, and other health guidelines.

South Texas cities were the first to deal with a hurricane during the coronavirus pandemic, tweaking shelter practices to have adequate distancing between evacuees and outfitting first responders with protective equipment in order to follow safe coronavirus health guidelines from the Centers for Disease Control and Prevention.

Residents are strongly encouraged to prepare for these and other storms during this “extremely active” hurricane season – particularly with the additional challenge of COVID-19.

Hurricane preparedness guidance is available from Triple-I here.

Insurance considerations

Wind-caused property damage is covered under standard homeownersrenters, and business insurance policies. Renters’ insurance covers a renter’s possessions while the landlord insures the structure.

Property damage to a home, a renter’s possessions, and a business – resulting from a flood – is generally covered under FEMA National Flood Insurance Program (NFIP) policies, if the homeowner, renter, or business has purchased one. Several private insurers also offer flood insurance.

Private-passenger vehicles damaged or destroyed by either wind or flooding are covered under the optional comprehensive portion of an auto insurance policy. Nearly 80 percent of U.S. drivers choose to purchase comprehensive coverage.

I.I.I. Media Tour: What You Need to Know and Do
as Hurricane Season Peaks

The Insurance Information Institute (Triple-I), along with Colorado State University’s atmospheric research scientist Dr. Phil Klotzbach, will be conducting a satellite media tour on Tuesday, August 11, to talk about what may lie ahead for the remainder of the hurricane season.

Dr. Phil Klotzbach, Colorado State University

We will be talking with news organizations throughout the U.S. about the steps individuals and businesses in hurricane-prone states need to take to protect their property and possessions with the right type—and amount—of insurance.

The following subject-matter experts will be available for interviews:

  • Sean Kevelighan, CEO, Insurance Information Institute (Triple-I)
  • Dr. Phil Klotzbach, Research Scientist, Colorado State University and a Triple-I Non-Resident Scholar
  • Laura L. Favinger, Chief Administrative Officer, Triple-I
  • Mark Friedlander, Director, Corporate Communications, Triple-I

Damage caused by tropical storms and hurricanes can upend lives for months, and sometimes years. Even in the country’s most vulnerable coastal states, individuals and businesses may underestimate their risk or have insufficient insurance coverage, operating without either an evacuation or a business continuity plan.

As the peak of 2020’s already busy Atlantic hurricane season approaches, it’s time to make sure you’re ready.

Nearly 20 media outlets have signed up to participate, and the following stations will be broadcasting live interviews (times are Eastern Standard):

08-11-2020 08:35 am – 08:45 am ET: WRAZ-FOX TV Raleigh-Durham (27) “WRAL’s 8am News on Fox50” Live
08-11-2020 09:20 am – 09:30 am ET: WPBF-ABC TV West Palm Beach-Ft. Pierce (36) “WPBF 9AM NEWS” Live
08-11-2020 09:40 am – 09:50 am ET: WBRC-FOX TV Birmingham (Ann and Tusc) (44) “Good Day Alabama” Live
08-11-2020 10:20 am – 10:30 am ET: WTKR-CBS TV Norfolk-Portsmth-Newpt Nws (42) “Coast Live ” Live

If you’d like to arrange an interview with our experts, please contact MultiVu Media Relations, 800.653.5313 x3