2017 was a year of records for
sure. Most notably, professional eater Joey Chestnut set a new record by eating
55 glazed doughnuts in eight minutes.[1] At a university in
Ohio, 972 people set a record by dressing as penguins.[2] And, Ayanna Williams of Texas set a record thanks
to her fingernails reaching a combined total length of 18 feet, 10.9 inches.[3]
Unfortunately, the U.S. also set a record in 2017 with a total of $306 billion
in damage resulting from several natural disasters. In fact, the 2017 season
was the first time that three Category 4 hurricanes — Harvey, Irma, and Maria —
made landfall in the United States and its territories in a one-year period.
Other
extreme weather events contributed to making 2017 the most expensive year on record for natural
disasters. In all, there were 16 natural disasters, each causing more than $1
billion worth of damage. Three of those natural disasters were hurricanes. In August 2017, Hurricane Harvey[4]
was responsible for approximately $180 billion in damage and was the costliest tropical
cyclone on record,
inflicting widespread flooding in the Houston
metropolitan area. This
historic rainfall caused massive flooding that displaced over 30,000 people and
damaged or destroyed over 200,000 homes and businesses. In September 2017, Hurricane Irma brought
numerous impacts to the Florida Keys and parts of Georgia and Alabama,
including significant property damage, widespread downed trees, and power outages causing
damages approximating $50 billion.[5] Also in September 2017, Hurricane Maria[6]
was responsible for at least another $100 billion in damage and was the worst
hurricane in Puerto Rico’s history. Hurricane
Maria wiped out most of Puerto Rico’s transportation and communication
systems as well as the electrical grid. It also destroyed numerous buildings
and homes. Each of these destructive superstorms now joins Katrina and Sandy in
the new top 5 costliest U.S. disaster events on record.[7]
In addition to the hurricanes, the
autumn wildfires
in California contributed another $18 billion in damage and destroyed
over 15,000 homes, businesses and other structures. Not to be outdone, Mid-West
hailstorms in March, May, and June caused over $8 billion in damage. Oh,
and don’t forget about the string of tornadoes that caused damage in excess of
$3 billion.
NOAA / Via ncdc.noaa.gov
Although
devastating weather is natural, many scientists say climate change exacerbated
the damage.[8] According to NOAA, the United States
experienced its third-warmest year on record in 2017.[9]
Assuming this trend continues, home and business owners, as well as insurers, can
probably expect similar weather patterns in 2018, making extreme weather events
the “new normal.” Insurers will also likely have to factor these “new
normal” weather patterns into their computer models when assessing risks going
forward.
Not surprisingly, 2017 also saw a record high of personal and commercial lines claims as a result of these natural disasters.[10] Assessing the extent of the damage from the
2017 disasters will take time. But given
the catastrophic nature of the claims and likelihood of a “total loss,”
insurers can expect to encounter various coverage issues pertaining to
valuation, increased cost of construction and code upgrades, business
interruption, and the theoretical period of indemnity associated with
rebuilding the damaged property. The
recent series of wildfires could also raise issues concerning the number of
occurrences and deductibles as well as ingress and egress. Whether these insurance claims also result in
a record high number of lawsuits disputing these coverage issues will play out
in the coming months. Perhaps, a new
record for the most lawsuits filed in any given year will be set in 2018.
Posted by Jennifer Hoffman
[1] http://kubiss.me/news/world-records-broke-in-2017-top-10-facts-about-new-milestones-met-this-year/
[2] Id.
[3] https://www.huffingtonpost.com/entry/guinness-world-records-2018_us_59b0582ee4b0dfaafcf51b1e
[4] https://www.thebalance.com/hurricane-harvey-facts-damage-costs-4150087
[5] https://www.ncdc.noaa.gov/billions/events.pdf
[6]https://www.wunderground.com/cat6/hurricane-maria-damages-102-billion-surpassed-only-katrina;
https://www.thebalance.com/hurricane-damage-economic-costs-4150369
[7] https://www.climate.gov/news-features/blogs/beyond-data/2017-us-billion-dollar-weather-and-climate-disasters-historic-year
[8] https://www.climateliabilitynews.org/2017/10/12/climate-change-disasters-hurricane-wildfires-drought/
[9] According to NOAA’s National
Climatic Data Center, the temperature average was 2.6 degrees Fahrenheit above
the 20th century average.
[10] https://www.insurancejournal.com/news/national/2018/01/04/476093.htm