Sometimes CAT Insurance is Fun!

We noted this article in today’s New York Times, spotlighting FM Global’s Rhode Island research lab.  

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The Weather Outside Will Be Frightful

Break out the snow shovels! Meteorologists predict above average snowfall in the Northeast this winter and especially bitter cold in the Northern states. According to forecasters, that shakes out to least 6 inches more snow than usual in the New York City and Boston areas and high totals in the Great Lakes areas in Pennsylvania, Ohio and upstate New York. The Southeast should be warmer than normal, but with a risk of tornadoes, forecasters say.

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When a Business Entrance is Blocked: Ingress/Egress Coverage in the Wake of Hurricane Harvey and Irma

As businesses and insurers recover from the devastation of Hurricane Harvey and Hurricane Irma, it may take time to fully assess the effects of these storms on a business’s bottom line. Invariably, however, the scale of these natural disasters likely provides some immediate impact on insureds’ businesses – the ability to access the premises may be barred or impacted. 

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Earthquake Experts Urge Acceleration of California Retrofitting Requirements

On September 19, 1985, more than 5,000 people in and around Mexico City lost their lives when the 8.0 magnitude Michoacán earthquake collapsed 412 buildings and seriously damaged several thousand more. Many of the buildings that collapsed were older structures built of unreinforced masonry. But newer multi-story buildings built of reinforced concrete actually fared the worst.

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Claims Stemming from Government Regulated Flooding After Hurricane Harvey

In August, Hurricane Harvey directly hit the city of Houston, leaving substantial wind and flood damage in its wake. Many home and business owners who avoided flood damage breathed a sigh of relief on August 28 when the immediate threat of flooding seemed to have passed. But for those Houstonians along the Buffalo Bayou, the worst of the damage was yet to come. In order to avoid flooding downtown Houston, the U.S. Army Corps of Engineers ordered “controlled releases” of both the Addicks and Barker Dams, thereby alternatively flooding thousands of homes and businesses that would have otherwise been spared. Now the owners of those homes and businesses are looking for a way to recoup their damages. 

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Big Pharma BI, CBI, and Service Interruption Claims Percolating in Puerto Rico

As recovery and rebuilding efforts drag on in Puerto Rico, Hurricane Maria’s impact on Big Pharma is radiating across the U.S., and around the globe as the dozens of drugs manufactured in Puerto Rico become scarce. Maria brought drug manufacturing to a screeching halt in Puerto Rico, where about 10 percent of all drugs prescribed in the U.S. are made. The FDA is focused on about 40 drugs it expects to be in short supply, including 13 that are made only in Puerto Rico. 

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Is Event Cancellation Coverage Up In Smoke?

As of the date of the publication of this blog entry, the wildfires that have been ravaging Northern California since October 8, 2017 have been somewhat contained. However, the slightest change in weather conditions could frustrate the efforts of firefighters and first responders and cause even more devastation to the region. The investigation into the cause(s) of the fires is still ongoing. Early reports indicated that faulty equipment of California utility PG&E may have ignited the fire, but at least one person has since been arrested on suspicions of arson. 

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Rain, Rain, Go Away, Don’t Flood Again in Texas Any Day

In 2001, Houston, Texas was in the path of the slow-moving, rain-heavy Tropical Storm Allison. That storm caused extensive flooding in downtown Houston and surrounding areas, ultimately dropping over 40 inches of rain in Southeast, Texas. And with that rain, and rain-caused flooding, people made insurance claims. Texas courts were therefore given the opportunity to analyze how water and flood in insurance policies should be interpreted under Texas law.

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Insurance Bad Faith Under Puerto Rico Law

Last month, as Hurricane Maria bore down on Puerto Rico, we reposted our Puerto Rico claims checklist and an analysis of causation under Puerto Rico law. In Maria’s devastating aftermath, many Puerto Ricans are still focused on necessities, and filing an insurance claim for damage to their home or business is not top of mind. But as recovery efforts gain momentum, the claims will begin to come in. Now is the time to review our posts from last month and consider how Puerto Rico law may apply to handling Maria insurance claims.

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Civil Authority Coverage in the Wake of Harvey and Irma

As the category 4 Hurricane Harvey approached the Texas Gulf Coast, many areas evacuated in preparation for the storm. And in the wake of the hurricane and the widespread flooding that followed, additional evacuations and curfews followed.

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Post-Irma Contingent Business Interruption (CBI) Claims

After Hurricane Harvey slammed into southeast Texas on August 25, 2017, our colleague Shannon O’Malley posted about the contingent business interruption (CBI) claims that would inevitably follow due to damage suffered by refining, chemical, and petrochemical facilities that supply critical products to manufacturers and other businesses across the country and around the world. (See “Contingent BI: Why Do I have a Hurricane Harvey Claim from Hoboken?”)

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Earthquakes & Hurricanes in Mexico (Any End in Sight?): Tips for International Insurers

A powerful 8.1 magnitude earthquake struck southern Mexico late Thursday, September 7, 2017. According to the U.S. Geological Survey, the epicenter of the earthquake was in the Pacific Ocean off the coast of the state of Chiapas – the southernmost state in Mexico. Because of the magnitude of the quake, its effects were felt throughout Mexico and as far north as Mexico City – 600 miles from its epicenter. Approximately 50 million people across Mexico felt the tremors from the quake. The earthquake, one of the most powerful ever recorded in Mexico, toppled hundreds of buildings, and killed at least 61 people.

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Maria – Re-Post of Puerto Rico Claims Checklist

With the Imminent Arrival of Hurricane Maria in Puerto Rico, we are re-posting our claims checklist for Puerto Rico.

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Maria - Concurrent Causation in Puerto Rico

While Puerto Rico was spared a direct hit from Hurricane Irma, it now appears it will face the full brunt of Hurricane Maria. Maria is projected to strike Puerto Rico as a Category 4 Hurricane. Many of the same concurrent causation issues that we predicted may occur with Irma are also likely to exist with Maria and may be even more pronounced with the increased severity of damage from Maria. 

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Irma - Florida Office of Insurance Regulation Emergency Order

The Florida Office of Insurance Regulation has issued an Emergency Order related to Hurricane Irma.

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Will Reinsurers Sustain a Direct Hit From Hurricane Harvey?

While predictions and analyses abound regarding the potential hit from Hurricane Harvey direct insurers may take, the potential impact to reinsurers has received considerably less attention. In the aftermath of this historic storm, some are beginning to ask, “will Harvey hit reinsurers where it hurts?” The answer is: “it depends.” For some reinsurers, including the reinsurers of the National Flood Insurance Program (NFIP) and reinsurers with exposure to auto risks, the storm is all but certain to deal a significant blow. For others, however, Harvey may not pack the same punch. Uninsured flood losses and/or high attachment points may shield many reinsurers from the worst of it. For those reinsurers that are exposed, the way in which ceding carriers aggregate their claims could be crucial to determining the overall reinsurance exposure.

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Why Do I Have A Hurricane Harvey Claim From Hoboken?

As businesses and insurers sort out the impacts of Hurricane Harvey, it will take time to assess the physical damage and resulting business interruption losses. Invariably, however, business interruption impacts from Harvey will not just be felt along the Texas Gulf Coast. Texas’ significant refining, chemical and petrochemical facilities supply critical products to businesses throughout the U.S. and abroad (and to each other). To the extent that those supplies are disrupted, businesses located far from the Lone Star State may choose to assert contingent business interruption (“CBI”) claims under their own first-party property policies.

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Hurricane Irma – The State of Concurrent Causation and ACC Clauses in Florida

For years Florida courts were plagued by the issue of determining the appropriate theory of recovery to apply when two or more perils converge to cause a loss and at least one of the perils is excluded from an insurance policy. Florida courts developed two competing (and potentially inconsistent) theories on how to assess coverage: the efficient proximate cause and concurrent causation doctrines. In December 2016, the Florida Supreme Court in Sebo v. Am. Home Assurance Co., 208 So. 3d 694 (Fla. 2016) put an end to this decades-long debate when it formally adopted the concurrent causation doctrine in a case involving multiple perils and a first-party insurance policy.

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Irma - Florida Property Insurance Claims Checklist

On September 4, 2017, Governor Rick Scott issued an Executive Order officially declaring a state of emergency in all 67 counties within the State of Florida in response to Hurricane Irma. Florida insurers are subject to various statutory/administrative provisions based on their status as either admitted carriers or surplus lines carriers. These statutes provide insurers and insureds with timelines to make and adjust claims. 

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Irma - Concurrent Causation in Puerto Rico

While Puerto Rico was spared a direct hit from Hurricane Irma, it was lashed by Irma’s wind and experienced significant amounts of rain that will likely lead to flooding. There may also be damages arising from storm surge along the Northern Coast. Reportedly, more than 1 million people are without power. Many policies may exclude flood and limit or exclude losses arising from power interruption. Combined with the significant wind damage that is expected, it is inevitable that disputes over the extent of covered versus non-covered loss will arise.

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Irma – Puerto Rico Claims Checklist

With the Imminent Arrival of Hurricane Irma in Puerto Rico, Insurers Should Keep in Mind the Following Claim Handling Requirements from the Puerto Rico Insurance Code.

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Concurrent Causation and Texas Law (Re-Post from August 31)

Hurricane Harvey initially hit the Texas Gulf Coast with damaging winds and storm surge. As it downgraded to a Tropical Storm, Harvey dumped the highest amount of rainfall on the Houston area ever recorded from a single storm, resulting in record flooding. In analyzing Harvey claims under a property insurance policy, standard residential policies exclude flood, and most commercial policies either exclude or sub-limit flood damage.

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HB1774 - Insurers May Elect to Adopt Adjusters’ Liability

The applicability of Texas House Bill 1774 to Hurricane Harvey claims has been a hot topic in the press and on social media. This legislation, which became effective on September 1st, will apply to all Hurricane Harvey lawsuits filed on or after that date. It will also apply to all hail and windstorm lawsuits filed after September 1st. The legislation changes nothing with respect to the work of adjusters handling Texas insurance claims. As always, adjusters should continue to adjust Hurricane Harvey claims promptly, fairly, and consistent with policy terms.

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First Harvey Lawsuit Filed to Beat New Texas Law

Late Thursday afternoon, a Dallas law firm filed a lawsuit to circumvent a new law that went into effect on Friday, September 1. The newly passed law, HB1774, was meant to curb hail lawsuit abuse, but after Hurricane Harvey some industry representatives raised concerns that plaintiff attorneys might use the tropical storm as a way to overwhelm carriers with damage claims.

In the complaint, Sunbelt Trees, LLC v. EMC Insurance Companies and Employers Mutual Casualty Company, the plaintiff alleges damage ranging between $200,000-$1,000,000 and loss of use of its tree farm due to Hurricane Harvey and states that while a claim was filed with the defendants, no payment had been made as of the date the lawsuit was filed. In addition, the plaintiff seeks pre-judgment interest, punitive damages and attorneys’ fees.

According to Steven Badger, a partner with Zelle LLP’s Dallas office, there is absolutely no reason that a Hurricane Harvey lawsuit should have been filed prior to September 1st. “The insurance company hasn’t even adjusted the claim yet,” said Badger. “How could it have breached the insurance policy? How could it have violated the Insurance Code or DTPA? Obviously, it hasn’t.”

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Texas Department of Insurance Declares Harvey a Catastrophe

As anticipated, on Friday, September 1^st the Texas Department of Insurance issued an order declaring Harvey a catastrophe, thereby extending claims handling deadlines under §542.059 of the Texas Insurance Code. Our simple reference chart reflects the extended deadlines. Click the highlighted link above to access it.

A copy of the TDI’s order can be found here.

Concurrent Causation in Louisiana: The Basics

• Anticipated damage from Hurricane Harvey is expected result from wind, wind-driven-rain, and flood. Under most policies, damage caused exclusively by wind or wind-driven rain is recoverable, but damage caused exclusively by flood is excluded or sub-limited. Where possible, Louisiana courts apportion between wind damage and flood damage.

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Summary of Texas First-Party Claims Handling Deadlines for Hurricane Harvey Claims

The Texas Insurance Code provides various claims handling deadlines for both admitted and surplus lines insurance carriers. These deadlines have been accumulated in a simple reference chart. It is important for insurance companies and their adjusters to comply with these deadlines to ensure the prompt adjustment and payment of claims and avoid any statutory penalties.

A New Arrival Threatens Mexico’s Tourism Industry: Tropical Storm Lidia

Tropical Storm Lidia may be in the shadows of the extensive Hurricane Harvey coverage, but it is certainly nothing to ignore. While news of the floods and devastation in Texas dominate the media outlets, Tropical Storm Lidia is bound to leave its mark by the sheer potential for large-scale property damage to Los Cabos’s bustling hospitality industry. 

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The Texas Supreme Court’s Harvey Orders do not Delay the September 1 Effective Date for HB1774 (Section 542A of the Texas Insurance Code)

We have issued several posts and comments regarding misinformation that has been distributed concerning HB1774 and the new Texas Insurance Code provisions that go into effect on September 1^st. Unfortunately, more misinformation is starting to surface — the idea that the recent Texas Supreme Court orders extending statutes of limitations and “deadlines and procedures” due to Harvey serve to delay implementation of the new law. They do not. 

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Concurrent Causation and Texas Law

Hurricane Harvey initially hit the Texas Gulf Coast with damaging winds and storm surge. As it downgraded to a Tropical Storm, Harvey dumped the highest amount of rainfall on the Houston area ever recorded from a single storm, resulting in record flooding. In analyzing Harvey claims under a property insurance policy, standard residential policies exclude flood, and most commercial policies either exclude or sub-limit flood damage.

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Quick Harvey Claims Offer Little Payoff For Policyholders

While some Texas lawyers are encouraging property owners to quickly lodge claims for Hurricane Harvey damage before a new state property insurance law takes effect on Friday, the reality is that the potential downsides of the legislation — including a lower interest rate on successful lawsuits against insurers — don't warrant such swift filings, several attorneys, including Steven Badger of Zelle LLP, told Law360. 

Continue to Law360 (subscription required).

New Texas Legislation Does Not Change Texas' Insurance Claim Process

From the Texas Department of Insurance:

House Bill 1774

• Does not apply to claims with the Texas Windstorm Insurance Association (TWIA).

• Does not apply to claims with the National Flood Insurance Program (NFIP).

• Applies to claims made under an insurance policy providing coverage for real property, such as homes and other buildings. The legislation also applies to claims made under the Fair Access to Insurance Requirements (FAIR) Plan Association.

• Requires policyholders to provide notice before filing a lawsuit. The legislation also makes changes to the requirements for inspections related to a lawsuit, recovering attorney’s fees, and statutory penalty interest.

We’ve received questions about House Bill 1774 from the last regular session. The legislation does not change how you file a claim or how your insurer will process your claim. Contact your insurance agent or company to file a claim.

For more on the claims filing process, see How do I file a homeowners insurance claim?

House Bill 1774:

For help with insurance questions and recovery resources, visit TDI’s Help After Harvey website.

Posted by Thomas Cook

Hurricane Harvey – Texas Department of Insurance Bulletins

The Texas Department of Insurance (“TDI”) issued the following bulletins pertaining to Hurricane Harvey on August 26, 2017, many of which apply to property and casualty insurers. They can be accessed by clicking the highlighted links below.

The bulletins most directly relevant to P&C insurers are as follows:

• Premium Payments Grace Period – encourages insurers to suspend (but not forgive) premium payments.
• Recommending Building and Repair Contractors – reminds insurers that homeowners are entitled to have their property repaired by a contractor of their choice.
• Claims Adjusters and Adjusting – reminds insurers that they are authorized to use non-resident and emergency adjusters; that roofing contractors are prohibited from adjusting claims; and that public adjusters must be licensed in Texas.
• Rating and Underwriting – opines that it is inappropriate for insurers to re-rate, cancel, non-renew, or refuse to provide coverage due solely to a policyholder's status as a victim or evacuee of Hurricane Harvey.
• Denial of Wind Losses – encourages insurers who deny coverage for wind losses to inform policyholders of potential coverage under the Texas Windstorm Insurance Association (TWIA) if the loss occurred in the TWIA coverage area.
• Vacancy Provisions - encourages insurers to provide relief to those residents and policyholders who have been temporarily displaced, including the suspension of any vacancy provision in the policy, to allow continuing insurance coverage.
• Credit Scoring and Credit Information – reminds insurers to follow the guidelines of §559.103 of the Texas Insurance Code. 

We will update as additional bulletins are issued. 

Posted by Thomas Cook

TDI Catastrophe Bulletins Issued August 26, 2017

Bulletins Home

2017
Bulletin Number	Date Issued	Reference	Subject
B-0009-17	August 26, 2017	Hurricane Harvey – Premium Payments Grace Period	Property and Casualty
B-0017-17	August 26, 2017	Hurricane Harvey – Recommending Building and Repair Contractors	Property and Casualty
B-0010-17	August 26, 2017	Hurricane Harvey – Medical Equipment and Services	Life and Health
B-0011-17	August 26, 2017	Hurricane Harvey – Claims Adjusting and Adjusters	Financial
B-0012-17	August 26, 2017	Hurricane Harvey – Preauthorized Health Care, Referrals, Notification of Hospital Admissions, and Medical Necessity Reviews	Life and Health
B-0013-17	August 26, 2017	Hurricane Harvey – Commercial Automobile Insurance	Property and Casualty
B-0014-17	August 26, 2017	Hurricane Harvey – Prescription Medication Coverages	Life and Health
B-0015-17	August 26, 2017	Hurricane Harvey – Property and Casualty Rating and Underwriting	Property and Casualty
B-0016-17	August 26, 2017	Hurricane Harvey – Credit Scoring and Credit Information	Property and Casualty
B-0018-17	August 26, 2017	Hurricane Harvey – Denial of Wind Losses	Property and Casualty
B-0019-17	August 26, 2017	Hurricane Harvey – Vacancy Provisions	Property and Casualty

Hurricane Harvey First Party Property Claims Checklist (Texas)

With the Arrival of Hurricane Harvey, Insurers Should Keep in Mind the Following Texas Insurance Code Claim-Handling Guidelines  

• Acknowledge claim in writing and commence investigation within 15 days. § 542.055
• Request all necessary items from insured and provide instructions and blank proof of loss forms for insured to complete. § 542.055
• A reservation of rights should be issued as appropriate.
• Accept claim, reject claim, or state in writing additional time is needed, explaining why more time is needed to conduct an investigation within 15 days. § 542.056
• If additional time to investigate claim is requested, accept or reject claim within 45 days after the notice requesting additional time is provided. § 542.056(d)
• Make payment within 5 business days after acceptance of claim. § 542.057(a)
• The claim-handling deadlines above can be extended by 15 days in the event of a weather-related catastrophe or major natural disaster as defined by the insurance commissioner. § 542.059(b)
• Failure to comply with any of the deadlines set forth above can subject an insurer to statutory penalties of 18% per year on the amount of the claim, plus reasonable attorney’s fees even if there is a good faith basis for not paying the claim. § 542.060 (effective through August 31, 2017, amended by H.B. 1774) 

Some Additional Issues to Consider:  

• Civil Authority – Mandatory evacuations have already been issued in several Texas counties.
• Service Interruption – Power and telephone/cell service may be disrupted.
• Sue and Labor – Businesses may shut down operations in advance.
• Adjuster licensing – Texas requires all adjusters and public adjusters to be licensed in the State of Texas. There is a provision for emergency licensing of adjusters in the event of a catastrophe.
• Flood hazard zone areas—Areas identified on the Flood Insurance Rate Map can change so be aware of applicable policy limits by hazard zone.
• Flood and Wind sublimits

Click here for a PDF version of this checklist.

Posted by Thomas Cook and Jason Reeves

Cyber Claims in Mexico: A Reactionary Evolution of an Insurance Sector

In the wake of numerous cross-border, well-publicized cyber-attacks, cyber-insurance has quickly become a hot issue. This area has also become a trending topic because of the abrupt and quick need for response in a generally uncharted area. The increasing levels of revealed vulnerabilities, the multiple methods of security breaches and the domino effect damage exposure are all major concerns.  Aware of this problem, it becomes imperative to understand best practices aimed at solving and/or minimizing issues that may arise in the context of reporting a cyber-attack or breach to a carrier.  Looking specifically to the practice in Mexico, here are some examples of claim reporting and handling in this field.

Notice of Claim:

Article 66 of the Mexican Insurance Contract Law indicates that the occurrence of a claim must be reported to the insurer within 5 days, unless the policy has another reporting provision. In the event that the claim is untimely reported outside of the statutory or policy deadline, the insurer may reduce the indemnity to what would have been paid had the claim been timely reported (Article 67). In view of the nature of the risk, it is best to report a cyber loss immediately upon learning of it.  One of the obvious reasons is that even with timely reporting, the claim investigation is time-sensitive and very involved.  Between the identification of the attack, verification, provisional decision-making, notice to the risk management area and to the corresponding insurer and to those impacted by the cyber breach, critical hours, days and even weeks may pass.

What would be the impact of failure to report cyber-attacks "immediately" or at the "first opportunity" or "promptly"? Presently, cyber claim teams are very scarce throughout Latin America, and insurers sometimes rely on general adjusters that may not have a wealth of experience in this area.  The scarcity of these types of claims cause steep learning curves, difficulty in launching teams that may not be geographically ideal, or have individuals unfamiliar with the insured’s computer systems and unable to quickly stop the loss of information. Because of this, one critical question may be, “can the insurer reduce the amount of its obligations by arguing that it would have taken immediate steps to reduce the loss?” 

Early Intervention:

It has become common for insurance policies to include a panel of cyber forensic consultants and suppliers in the event of a loss.  However, many times these suppliers’ fees are likely to fall below the deductible.  If the insured wishes to utilize an off-contract consultant or supplier that may charge a lesser fee, the issue of compelling the insured to stick to the policy’s listed consultants and suppliers even where the amount is below the deductible may arise.

In addition, Article 113 compels the insurer to pay expenses incurred by the insured in mitigating its damages post-loss.  Therefore, one may wonder, are Article 113 and the policy supplier provisions at odds?

In practice, consultants and suppliers written into the policy usually have the function of verifying that there was an actual "attack" -a trigger of many cyber policies- therefore assisting the claim progression by streamlining the verification and recommendation process. One of the reasons why this becomes imperative is because there have been instances where the policy – subject to Mexican law and delivered in Mexico – requires the insured to absorb the costs of the cyber consultant or supplier in completing this otherwise claim handling role.

In case the "advisers" swing quickly into action to assist, if it is then established that the loss is excluded for some reason, the insurer has already intervened through the experts appointed in the policy to provide crisis control, which might be interpreted as an acceptance of coverage for the claim.

As with any facet of claim handling, but particularly in the context of cyber-attacks, it is imperative to have a specialized strike force.  Knowing the local law, the practical realities, and keeping up with the continual evolution of this growing area are vital tools that make each type of consultant and supplier uniquely qualified for the challenge.

Posted by Daniel Baron* and Nestor Rodriguez, Socio Director en Medina y Rodriguez Abogados

*Not licensed to practice law in Florida

The Dance of the Cyclones

On August 7, 2017, powerful Typhoon Noru made landfall in Japan, lashing the island nation with heavy rainfall and maximum sustained winds near 75 mph.  While the dangers associated with Noru ought not to be underestimated, there is a sigh of relief, considering that last week, media outlets worldwide characterized Noru as the “Earth’s strongest storm of 2017.”

What had happened for Noru to achieve such notoriety?  After its birth on July 20, 2017, Noru roamed the Pacific Ocean at a strength equivalent to a Category 1 Hurricane in the Atlantic Basin.  However, roughly four days later, Noru encountered Tropical Storm Kulap, causing the two systems to engage in what experts call the “Fujiwhara effect.”  After dancing around each other, Noru—the stronger and bigger of the two systems—simply swallowed Kulap, resulting in a much more potent storm.  After engaging in this dance with Kulap, Noru crossed over its path from earlier in the week and began heading towards southern Japan.

In layperson’s terms, what is the Fujiwhara effect?  Discovered in the 1920s by Sakuhei Fujiwhara, a Japanese researcher and meteorologist, the Fujiwhara effect—or, Fujiwhara interaction—explains a phenomenon where two tropical cyclones less than 900 miles apart rotate about a common midpoint.  As a result of this movement, the distance between the two vortices decreases.  Depending on the size of the systems, as these severe weather patterns circle each other, they have the potential to merge into one storm.  Usually, the bigger system will absorb the smaller system.  Noru and Kulap engaged in this merry-go-round-like weather pattern around July 24, 2017.  However, it is also possible that this binary interaction might deflect the original path of one, or even both, of the systems. 

This graphic explains the Fujiwhara effect:

How common is the Fujiwhara effect?  The Fujiwhara effect is relatively well documented in the annals of weather history.  More or less around the same time as Noru and Kulap engaged in their dance, tropical cyclones Hilary and Irwin engaged in a similar ritual in the eastern Pacific Basin, with Hilary’s wind shear eventually weakening Irwin.

In 1995, Hurricane Iris danced with Hurricane Humberto, before interacting with, and eventually absorbing, Tropical Storm Karen. There was also major concern back in October 2016 that Hurricane Matthew, a powerful late-season hurricane, could interact with Tropical Storm Nicole, a smaller system that formed and continued to linger in the Atlantic Basin northeast of Hurricane Matthew.  Experts feared that after engaging in their cyclonic dance, Hurricane Matthew would take aim at Florida for a second time within a few days, further devastating the area.

Superstorm Sandy, one of the largest and most costly tropical storms in the history of the United States, also experienced this effect before hitting the East Coast of the United States in late October 2012.  Sandy interacted with a low-pressure trough to its southwest that steered the storm west towards New Jersey.  Eventually the two systems merged to form the devastating “Superstorm” or “Frankenstorm” Sandy.

What are the implications for the insurance industry?  With the 2017 hurricane season in full swing—and the National Oceanic and Atmospheric Administration predicting above-normalactivity—the Fujiwhara effect plays a prominent role in severe weather patterns that the insurance industry has a vested interest in observing.  One issue to potentially consider is to what extent a system that undergoes the Fujiwhara effect changes in its meteorological makeup from the original system.  As the threat of Hurricane Matthew interacting with Tropical Storm Nicole before taking aim at Florida for a second time has demonstrated, another issue to consider is the number of occurrences.  With that said: Welcome to the dance of the cyclones!

Posted by Isabella Stankowski-Booker