Category Archives: Winter Storms

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.

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.”

How to survive severe cold weather

During the deep freeze across multiple states this week, some U.S. electric companies are being forced to pull the plug on consumers in the form of “rolling blackouts” to conserve energy, Insurance Information Institute’s (Triple-I) Scott Holeman reports in the video above.

The severe cold has propelled The Homeowner’s Severe Cold Weather Survival Guide to the “most read” article position at the Triple-I’s website.

Much of North America experiences periods of severely cold weather and is susceptible to snow and ice storms—extreme conditions that can inflict considerable damage on homes and create liability risks. Standard homeowners policies will cover most disasters that result from a freeze—but when the weather outside is frightful, it’s better to minimize the potential risks.

The Survival Guide lists a few steps that can be taken inside and outside a home to reduce risks of property damage, such as:

INSIDE THE HOUSE

Check the location for the main water shutoff in your home. And refresh your memory on—or learn—how the shutoff works to prevent your home’s pipes from bursting.

Open hot and cold faucets enough to let them drip slowly. In severely frigid temperatures, keeping water moving within the pipes will help prevent freezing.

Check to see that fireplaces, wood stoves, and electric heaters are working properly. Make sure no combustible items are near a home’s heat sources. This week’s widespread power outages have contributed to Kerosene Heater Safety becoming the second-most popular article at the Triple-I’s website.

OUTSIDE THE HOUSE

Watch for ice dams near gutter downspouts. Ice dams occur when water is unable to drain through the gutters and instead seeps into the house. Clear gutters of leaves and debris to allow runoff from melting snow and ice to flow freely at the base of the gutter, known as the downspout.

Keep your garage doors closed. This will prevent weather damage to whatever is stored in the garage. Plus, if your garage is attached to your house, the home entrance door from the garage is probably not as well-insulated as an exterior door so this will keep more heat in.

Double-check for dead, damaged, or dangerous tree branches and have them removed. Even if they looked sound earlier in the year, trees can be affected by ice, snow, or wind. When stressed, branches can fall and damage your house or car, or injure someone on or near your property.

The Triple-I has additional winter weather resources:

Snowstorm-Caused Damage Covered Under Auto and Home Policies
Winter Storms
How to file A Homeowner’s Claim
Minimizing winter weather risks
If the power goes out, can you be reimbursed for spoiled food?

Californians Warned About Mudslide Risk
as Winter Bears Down
on Wildfire Areas

California Insurance Commissioner Ricardo Lara is alerting citizens to review their insurance policies in order to protect themselves and their assets in anticipation of winter weather bringing the possibility of  floods, mudslides, debris flows, and other disasters to recent wildfire burn areas throughout the state.

The commissioner issued a notice to insurers reminding them of their duty to cover damage from any future mudslide or similar disaster caused by recent wildfires that weakened hillsides. In particular, the United States Geological Survey (USGS) has projected increased likelihood of debris flow for fire-scarred areas of the state in the event of heavy rainfall.

Many Californians may not be aware that homeowners’ and commercial insurance policies typically exclude flood, mudslide, debris flow, and other similar disasters—unless they are directly or indirectly caused by a recent wildfire or another peril covered by the applicable insurance policy. For insurance purposes, it’s important to understand the difference between “mudslides” and “mudflow.” 

Mudslides occur when a mass of earth or rock moves downhill, propelled by gravity. They typically don’t contain enough liquid to seep into your home, and they aren’t eligible for flood insurance coverage.  In fact, mudslides are not covered by any policy. 

Mudflow is covered by flood insurance, which is available from FEMA’s National Flood Insurance Program (NFIP) and a growing number of private insurers. Like flood, mudflow is excluded from standard homeowners and business insurance policies—you must buy the coverage separately. 

The California Department of Insurance has posted a fact sheet for consumers to answer questions about what their policies cover.

Determining the relative impact of winter snowstorms

It’s mid-December and some areas of the country have already had heavy snowfalls.  Winter storms can have a serious economic impact with disruption of business and travel, collapsed roofs and stresses on municipal governments. It’s useful to know the relative impact of winter storms, and in a recent blog post,  AIR Worldwide spotlights a rating scale called Northeast Snowfall Impact Scale (NESIS), developed by the  Weather Channel and the National Weather Service.

NESIS provides a relative measure of Northeast winter storm impact based on total snowfall amount, geographic distribution, and population density. The scale does not consider the replacement value of property, however.

NESIS has five categories: Extreme, Crippling, Major, Significant, and Notable. The Great Blizzard of 1993 holds the record for maximum NESIS value for a single storm at 13.20

The I.I.I. has a Facts & Stats about Winter Storms here.

Winter Storm Damage? Insurers Have You Covered

Most likely snowfall for #Blizzard2017 in the NY/NJ metro area now looks like this, per the National Weather Service New York:

While major cities in the Northeast may have been spared blizzard conditions, a strong winter storm is still unfolding and inland areas are watching the snow pile up.

Wondering if you’re covered for winter storm damage? Here’s the lowdown from the Insurance Information Institute:

Auto Policies

  • Vehicle crashes between two or more drivers caused by snowy and slippery roads are covered by liability insurance, which is required by most states. A car that crashes into an object would generally be covered under the optional collision portion of an auto policy.
  • Physical damage to a vehicle caused by heavy wind, flooding or fallen ice or tree limbs is covered under the optional comprehensive portion of an auto policy.

Homeowners Policies

Standard homeowners insurance covers:

  • Wind-related damage to a house, its roof, its contents and other insured structures on the property. Also, wind-driven snow or freezing rain that gets into the home because the home was damaged by wind.
  • Tree limbs that fall on a house or other insured structure on the property—this includes both the damage the tree inflicts on the house and the cost of removing the tree, generally up to about $500.
  • Damage from ice and other objects that fall on the home.
  • Damage to the house and its contents caused by weight of snow or ice that creates a collapse is covered.
  • Freezing conditions such as burst pipes or ice dams, a condition where water is unable to drain properly through the gutters and seeps into a house causing damage to ceilings and walls. However, there is generally a requirement that the homeowner has taken reasonable steps to prevent these losses by keeping the house warm and properly maintaining the pipes and drains.
  • Additional living expenses (ALE)—in the event that a home is severely damaged by an insured disaster. This would pay for reasonable expenses incurred by living elsewhere while the home is being fixed.
  • Damage caused by flooding is not covered by standard homeowners or renters insurance policies. Melting snow that seeps into a home from the ground up would be covered by flood insurance, which is provided by FEMA’s National Flood Insurance Program, and a few private insurers. Flood insurance is available to both homeowners and renters.

Ready For First Flakes In Northeast Blizzard?

In the words of the National Weather Service (NWS): “Things get interesting for the East Coast beginning Monday night.”

A strong nor’easter will cause a late season winter storm stretching from the central Appalachians to New England, with impacts for many of the big cities in the Northeast like New York City, Boston, Philadelphia.

Widespread winter storm warnings are now in effect for heavy snow accumulations. Blizzard conditions are expected for the NY/NJ metro areas, in addition to damaging wind gusts and coastal flooding, per NWS New York.

How much snow?

Via NWS NY blizzard briefing this morning:

Key preparation stats for New York alone, include:

  • The New York State Emergency Operations Center is activated with stockpiles of sandbags, generators, pumps and vehicles on standby.
  • New York City’s Department of Sanitation is pre-deploying 689 salt spreaders across the five boroughs. PlowNYC is activated (where you can track the progress of city spreaders/plow vehicles) and more than 1,600 plows will be dispatched when more than 2 inches of snow accumulates.
  • New York City Transit will monitor conditions for subways and buses via its Incident Command Center situation room, with 13,000 personnel on duty for subways during the storm, including more than 9,700 snow-fighting personnel.
  • Port Authority of New York and New Jersey has hundreds of pieces of snow equipment at the airports, including melters able to liquefy up to 500 tons of snow an hour and plows that can clear snow at 40 mph.

And insurers, too, are well-prepared and ready to respond to the needs of their policyholders.

Are you prepared? Check out Insurance Information Institute facts and statistics: winter storms and winter weather preparation tips.

Preparing for Colder Weather

As some parts of the Northeast experience their first frost/freeze of the season, this is a good time to make some cold weather preparations.

NOAA’s recently issued U.S. Winter Outlook said the development of La Niña, the climate phenomenon and counterpart of El Niño, is expected to influence winter conditions this year.

La Niña favors drier, warmer winters in the southern U.S. and wetter, cooler conditions in the northern U.S. but because forecasters expect it to be weak and short-lived, we probably shouldn’t bet against snow.

screen-shot-2016-10-26-at-10-05-18-am

Other factors that often play a role in the winter weather include the Arctic Oscillation, which influences the number of arctic air masses that penetrate into the South and create nor’easters on the East Coast, and the Madden-Julian Oscillation, which can affect the number of heavy rain events in the Pacific Northwest.

NOAA explains that its seasonal outlook does not project where and when snowstorms may hit or provide total seasonal snowfall accumulations.

“Snow forecasts are dependent upon the strength and track of winter storms, which are generally not predictable more than a week in advance. However, La Niña winters tend to favor above average snowfall around the Great Lakes and in the northern Rockies and below average snowfall in the mid-Atlantic.”

Whatever the outlook (and some forecasters have a different take on how this winter may turn out), it pays to be prepared. As Mike Halpert, deputy director, NOAA’s Climate Prediction Center, says:

“Regardless of the outlook there is always some chance for extreme winter weather, so prepare now for what might come later this winter.”

The Insurance Institute for Business and Home Safety has resources on how to protect homes and businesses from winter weather damage here.

Winter storms are historically very expensive for insurers, and the third-largest cause of catastrophe losses, behind hurricanes and tornadoes, the Insurance Information Institute reports.

US Cat Losses By Cause of Loss

Winter storms caused an estimated $3.5 billion in insured losses in 2015, up from $2.6 billion in 2014, according to Munich Re.

Winter Weather Tops Billion Dollar Insured Cat Losses in 2015

Five of the seven individual billion-dollar insured loss natural disaster events in 2015 were recorded in the United States, according to Aon Benfield’s Annual Global Climate and Catastrophe Report.

The other two billion dollar events were recorded in Europe.

All of the events were weather-related and below the average of eight. The five events in the U.S. were equal to the 2000-2014 average.

Italy’s May 2012 earthquake was the last non-weather billion-dollar insured loss event.

The all-time record of 17 billion-dollar weather events was set in 2011.

The costliest individual insured loss event of the year was a prolonged stretch of heavy snow, freezing rain, ice, and frigid cold that impacted much of the eastern United States in February 2015. That event prompted an estimated $2.1 billion insured loss.

Other billion-dollar insured loss events in the U.S. included a severe thunderstorm outbreak in the U.S. in May and severe thunderstorms and flooding in December. Each of these events cost an estimated $1.4 billion in insured losses.

Another thunderstorm event in the U.S. in April cost $1.2 billion, while the yearlong drought in the West was another $1 billion insured loss event.

The two non-U.S. billion dollar insured loss events of 2015 consisted of the catastrophic December flooding in the UK that cost an estimated $1.3 billion, and European windstorms Mike and Niklas in March and April which resulted in an estimated insured loss of $1 billion.

CostliestInsuredCatLosses2015

Aon Benfield noted that on a global scale disasters caused insured losses of $35 billion in 2015, below the 15-year mean of $51 billion and 14 percent lower than the median ($40 billion).

This was the fourth consecutive year with declining catastrophe losses since the record-setting year in 2011.

The U.S. accounted for 60 percent of global insured disaster losses in 2015, reflecting the high rate of insurance penetration in the country, according to the report.

I.I.I. facts and statistics on U.S. catastrophes are available here.