Tag Archives: Hurricane Michael

Hurricane Michael insured losses reach $7.4 billion

Insured losses associated with 2018’s Hurricane Michael reached almost $7.44 billion, according to a recent Florida Office of Insurance Regulation (FOIR) update. The losses consist of residential and commercial property, private flood and business interruption insurance, and miscellaneous coverages. There were 149,773 claims made, and 89 percent of them were closed.

Hurricane Michael became a Category 5 storm on October 10, 2018, and made landfall near Mexico Beach, Florida, in the Florida Panhandle. It was the strongest hurricane to ever hit the Florida Panhandle and the second known Category 5 landfall on the northern Gulf Coast, according to the National Oceanic and Atmospheric Administration. It was the first Category 5 storm to make landfall in the United States since Hurricane Andrew in 1992.

An Artemis analysis of the FOIR report says that based on the run-rate of costs per claim (around $65,890 per claim), another $1 billion could be added to the total before every claim is closed down and that many of the claims remaining open will be among the more costly. Fewer than 69 percent of commercial property claims are closed, compared to almost 89 percent of residential. Business interruption claims are also slow to close and therefore are likely to increase the total.

 

The 2018 Hurricane Season: A Retrospective

Hurricane Michael

The 2018 hurricane season officially ended on November 30. The National Oceanic and Atmospheric Administration’s (NOAA) storm counts for the season were: 15 named storms, including eight hurricanes. Two of these were “major” hurricanes (Category 3, 4 or 5).

To put that into perspective, the average hurricane season has 12 named storms, including six hurricanes, of which three are major. That makes 2018 a little worse than a “normal” year, and well within NOAA’s predictions before the start of the season on June 1.

Fortunately, these numbers are down from the especially destructive 2017 season, which included the so-called “HIM” storms (Harvey, Irma, and Maria). In 2017 there were 17 named storms, including 10 hurricanes, of which six were major.

But that is little comfort to the people affected by the two major hurricanes, Florence and Michael.

Hurricane Florence: Florence reached Category 4 status on September 10, making landfall on September 14 in North Carolina as a Category 1. Because the storm moved very slowly, Florence dumped at least 30 inches of rain in parts of North Carolina, setting a record in the state for rain from a hurricane.

Catastrophe modelers have estimated that insured losses from Hurricane Florence could range from $2.5 billion to $5.0 billion, excluding National Flood Insurance Program losses. Worryingly, it’s been estimated that somewhere between 70 percent and 85 percent of flood losses are uninsured (get flood insurance, everybody).

Hurricane Michael: Michael became a strong Category 4 storm on October 10 and made landfall shortly afterward in the Florida panhandle. The storm registered wind speeds just under Category 5-level speeds, making Michael perhaps the strongest hurricane to ever hit the Florida panhandle.

Catastrophe modelers estimated that insured losses from Hurricane Michael could range from $6 billion to $10 billion.

(The loss numbers for both hurricanes are subject to change, since losses are still being adjusted and paid out.)

In comparison, the Property Claims Services (PCS) unit of ISO estimates that insured losses from Hurricane Harvey will top $14 billion. PCS estimates that insured losses from Hurricane Irma will be more than $20 billion.

At a high level, the 2018 season was bad – but compared to last year, it could also have been a whole lot worse. Not that that’s any comfort to people who lost homes or family members. Hopefully 2019 will be calmer.

For more information on the 2018 season, see the I.I.I.’s Facts + Statistics: Hurricanes page. And again, get flood insurance.

The “Sand Palace”: A Poster-Child for Resilience

You probably remember the “Sand Palace,” the lone house standing after Hurricane Michael made landfall in the Florida panhandle in October.

It’s a powerful story about one man’s stand against nature’s destructive power. But the Sand Palace is also a story about insurance.

There are generally two aspects of insurance. One is to pay out claims to make people whole again after a loss. Another is to incentivize behavior that makes those losses less likely to happen. In insurance-speak, we call that “mitigation.”

Consider the Sand Palace in that context. According to an AIR Worldwide analysis, the house was built to be even more resilient than Florida’s already-stringent building codes: reinforced concrete, limited windows, minimal space below the roof to prevent uplift, a first floor 15 feet above ground, and more.

AIR analyzed how this construction fared during the hurricane. The structure’s features reduced wind losses by about 90 percent compared to other homes. Plus, the height of the building significantly reduced any storm surge damage.

This led AIR to conclude that “the Sand Palace is an excellent case study of the impact of mitigating features for use in risk reduction.” Presumably, the house also made an excellent risk for an insurer to cover.

It’s fair to ask, though: at what cost resilience? These kinds of reinforcements can cost tens of thousands of dollars, which can be out of reach for many homeowners.

But that’s probably where insurance can play a role. For example, is there a potential for insurers to offer economic incentives or discounts to homeowners to make their houses resistant to hurricane-force floods and winds? This incentive could be particularly effective in a world where climate change events might cause insurers to raise their premiums to account for higher risks. (That’s why many argue that insurance can play a crucial role in helping to combat the effects of climate change.)

It’s not always easy to say where the intersection between the costs and benefits of mitigation is. That’ll be up to the individual insurer and their insureds. But if done right, mitigation can be a win-win strategy. Insurers don’t have to pay out as much money for losses. Consumers don’t have to pay as much for their insurance. And the world can be made a safer, more resilient place.

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’s trail of destruction

Our guest blogger, Lynne McChristian, is an I.I.I. representative based in Tallahassee, about 100 miles from where Hurricane Michael came to shore.

 By Lynne McChristian

After a major natural disaster, there are various levels of survivor conditions – ranging from total devastation to mild inconvenience. In comparison to what people are experiencing in Mexico Beach and the Panama City areas of Florida, my inconveniences are extremely inconsequential. I was asked for a first-person account, and here’s where things stand on a Sunday afternoon.

In my Tallahassee neighborhood, we have been without power since about 2:20 p.m. on Wednesday. This is Day 5 of powerlessness. The air conditioners are silent in the 88-degree heat, but the rumble of portable generators is a bit overbearing, especially at night. The choice is to keep the refrigerator contents cool, or sleep.

At least we have that option and a place to sleep, whereas so many do not. Immediately after the storm, about 90% of the town was without electricity. What makes Tallahassee a beautiful part of the state is the same thing that makes it vulnerable to high winds. Decades old, stately oak trees and towering pines offer shady respite one day, and following a major storm, they become something altogether different – a barrier to returning to a comfort zone.

All over town, trees are twisted up in power lines.  The utility company has a goal of restoring power to most before the weekend is over – and so we wait. On Sunday night, 30 percent of residents still do not have power, and I among them.

I am the owner of a brand-new generator. For some, the purchase is a gamble. Bet on a fast recovery or spend $700 on a bulky tool, use it once and store it forever. My purchase was a risk management decision; my mom turned 95 last week, and she lives with me. The generator gives me confidence that she will have the steady stream of oxygen from the concentrator she uses, so it was a wise purchase in my situation. Thanks, Home Depot, for restocking the generators multiple times to aid.

Streets are clear here in the state capitol, lined with mounds and mounds of tree trunks and tree limbs. Many gas stations are out of gas. It’s an inconvenience; that is all. The focus of recovery is on the countless others who would look at this town’s Hurricane Michael experience and think it barely a blip. By comparison, it is.

 

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.

National Flood Insurance Program take-up rates in select Florida counties

Hurricane Michael is approaching the Florida Panhandle on October 10 as very dangerous Category 4 storm. The map below shows the percentages of properties in high-risk counties that have National Flood Insurance Program flood policies. None of the counties most exposed to storm surge have a take-up rate above 32 percent, and in Liberty County, only 0.6 percent has insurance through NFIP.

The NFIP currently has about 85 percent of the flood insurance market which private companies have shunned for many years. But private companies, including innovative new start-ups like the one described here, are now entering the market and giving consumers a variety of options.

 

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.