Showing posts with label floods. Show all posts
Showing posts with label floods. Show all posts

Wednesday, November 13, 2019

Climate Exodus: Movement of the People

I’ve got love and assurance, I’ve got new [property] insurance
And I’ve got strength and endurance, so I count my blessings.
-Damian “Jr. Gong” Marley, Count Your Blessings

In 1955, the island community of Isle de Jean Charles, some 80 miles south of New Orleans, covered 22,000 acres. Since then, rising water levels and subsiding land have shrunk the island every year. Inch by inch and acre by acre, the surrounding marshes have claimed most of the island’s grassland and forests, so that today only about 450 acres remain. 

Continue reading.

Thursday, June 13, 2019

Latest Arkansas Floods Will Test The Already Vulnerable National Flood Insurance Program

President Trump recently declared the flooding throughout the Gulf Coast a National Emergency and pledged federal resources, including FEMA, to assist with the recovery efforts. All the while, one of the linchpins in flood-related national disaster preparedness – the National Flood Insurance Program (“NFIP”) – faces a disaster of its own.

Tuesday, September 18, 2018

Hurricane Florence - Contingent Business Interruption Claims Reaching Far Beyond Its Outer Bands

The devastating impact of Hurricane Florence may be felt well beyond North and South Carolina Boasting over 460,000 manufacturing workers, North Carolina has the largest manufacturing workforce in the Southeast, and the 10th largest in the U.S. Manufacturing accounts for 20 percent of the state’s GSP, fifth-highest in the nation. North Carolina is home to more than 290 automotive manufacturing establishments and a workforce of over 26,000. North Carolina’s automotive manufacturing industry grew 25 percent in the past five years.

Monday, September 17, 2018

Hurricane Florence: Civil Authority and Ingress/Egress Coverage in North and South Carolina

The evacuation orders issued in both North and South Carolina in advance of Hurricane Florence and the extensive flooding following its landfall will no doubt give rise to business interruption claims. Typically, coverage for these claims will fall under coverage for “civil authority” or “ingress/egress.”  Coverage for “civil authority” is usually an extension of coverage with similar language to the following:

Tuesday, May 1, 2018

Hurricane Harvey Flooding Continues to Muddy the Waters

As Texas continues to rebuild in the aftermath of Hurricane Harvey, the extent of the damage Harvey left in its wake is just now being realized. To date, private insurers have seen more than 670,000 property insurance claims resulting from Harvey.[1] The Texas Department of Insurance reports that insurers have paid out more than $4.5 billion in Harvey claims, with the expected number projected to increase to $15.7 billion by the time all claims are reported and settled.[2] Of these claims, more than 354,000 are residential property claims, and around 37,000 are commercial property.[3]

Thursday, April 26, 2018

Houston’s Floodpains (ahem, Floodplains)

When Hurricane Harvey headed for Houston, Texans braced for an expected large amount of rain and heavy winds. What they did not expect was the catastrophic flooding that took place in the city.

Wednesday, January 24, 2018

Natural Disasters in Latin America: A Look Back at 2017

2017 saw approximately USD 330 billion in losses from natural disasters worldwide, of which around USD 135 billion were insured, according to a Munich Re report. It was the second costliest year on record, only surpassed by 2011. Latin America was no exception to the trend, as a number of natural catastrophes hit the region last year.

Thursday, November 2, 2017

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. 

Tuesday, October 10, 2017

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.

Tuesday, May 9, 2017

First Quarter Numbers for Property Insurers Look Bleak, But is it Too Early to Call it a Trend?

The insurance industry has been able, in the past few years, to avoid a string of major catastrophes like those in the early 2000’s.  One might think that property insurers have gotten off easy. Appearances can be deceiving, however, as the industry has been battered by smaller, more frequent, events.  In fact, Fox Business recently reported that the first quarter of 2017 was the most expensive quarter for U.S. property insurers in more than 20 years. The cause for such dreary numbers can be attributed to severe weather—namely tornadoes, flooding, hail, and ice storms. As of early April 6, 2017, there have already been 5 weather and climate disaster events in the U.S., with losses exceeding $1 billion each.  The average for the most recent 5 years (2012–2016) is 10.6 severe weather events per year. In total, it is estimated that insurers have paid approximately $6 billion in weather-related claims so far this year compared to an estimated $4.5 billion as of the same time last year.


It is also worth noting that the first quarter of the year typically yields fewer catastrophe-related damages because hurricane season does not start until the second quarter. However, there were over 400 tornadoes from January through March 2017, compared to 205 during the same period in 2016. When the final tornado count for March is determined, the month will likely rank among the 10 most active Marches for tornadoes. Moreover, hail continues to show that it has devastating economic effects for both commercial and personal lines. 
With more than double the number of tornadoes than in 2016 and an increase in hail claims, insurers are bracing themselves for an increase in weather-related claims as we enter the second quarter.  According to NOAA, the contiguous U.S. had the second wettest April in over 123 years.  Moreover, hail is most likely to fall in the U.S. during the months of May and June. With the hail and tornado season underway and the hurricane season around the corner, weather related-claims should continue to roll in during the second quarter. 
Yet, it may not be all doom and gloom for property insurers, as forecasters are calling for a below-normal hurricane season this year. In fact, only 11 named storms are predicted for the U.S. for 2017. Of these named storms, only four are predicted to become hurricanes and only 2 are predicted to be Category 3 or higher (Category 3 hurricanes have sustained winds of 111 miles per hour.). This is slightly below the 30-year average of 12 named storms and six hurricanes per hurricane season. If these predictions are accurate, insurers will have El NiƱo to thank, since warmer-than-normal ocean water temperatures in the Pacific Ocean may limit the development of storms in the Atlantic. But as we all know from past hurricanes such as Andrew, Katrina, and Sandy, it only takes one named storm to have significant economic impact on the industry.
Insurers have no choice but to brave the storms to see how the 2nd and 3rd quarter numbers shape up. Mother Nature will always be unpredictable, and she will sometimes be violent. Although storm chasers will keep searching for the next big natural disaster, insurers should keep an eye on the smaller, more frequent, events that can be just as damaging to their loss ratios.  The first quarter 2017 numbers have already told their cautionary tale.

Published by Jennifer Hoffman

Tuesday, February 21, 2017

A Scary Dam Cat

The February 12, 2017 emergency evacuation of nearly 200,000 California residents living in and around the town of Oroville, downstream from the Oroville Dam, was a stunning reminder of the ironic danger created by major dams.  Built to prevent flooding and control the flow and use of fresh water, large dams also create the risk of a sudden, catastrophic flood against which nearby residents have no effective defense.

The Oroville Dam was built in 1967 near the source of the Feather River, and it is the tallest dam in the United States at 770 feet.  Four tributaries – the rather unimaginatively named West Branch, North Fork, Middle Fork and South Fork -- join up to form the Feather River.  Prior to 1967, those four tributaries met in the area that is now covered by the Oroville Dam Reservoir.  Now the tributaries feed into the Reservoir with the dam used to control the flow out of the reservoir and downstream to Oroville and Yuba City, with the Feather River ultimately flowing into the Sacramento River north of Sacramento. 


Along its path, the waters of the Feather River are diverted for use in hydroelectric plants, for agricultural irrigation and by citizens and other businesses.  The Oroville Dam is of tremendous benefit to the citizens of California, but such a massive engineering project also poses a risk.  If the Oroville Dam were to collapse, experts believe there would be no way to effectively warn nearby residents to evacuate before they are inundated with floodwaters.

The catastrophic failure of a major dam is a highly unlikely scenario, but it is a risk that has the attention of government officials, particularly in the post-9/11 environment.  In fact, it has been reported that the evacuation plans for the Oroville Dam and other major U.S. dams have not been made public for fear that the release of the plans might provide useful intelligence to terrorists.  A successful terrorist attack involving the use of heavy explosives to collapse the Oroville Dam is a frightening doomsday scenario, particularly since – in the words of one critic – the emergency evacuation plan in the event of a sudden collapse amounts to nothing more than an announcement to “Get the hell out of town!”

Far more likely than the collapse of a major dam itself, is the failure of the dam’s spillways, which is precisely what led to the Oroville crisis and evacuation.  Recent heavy rains in Northern California swelled the tributaries feeding into the Reservoir, taking it record high levels.  The Dam complex contains a main spillway situated near the Dam itself.  The spillway is basically a long concrete chute that runs downhill and feeds water into the Feather River just below the point where the flow of water through the Dam emerges.  The spillway – also built in 1967 -- is rarely in use, since its purpose is to release additional water when the Reservoir reaches dangerously high levels.  When the spillway is opened, the speed and volume of water running down the concrete chute is tremendous, and in early February officials noticed that a huge section of the concrete chute had broken apart and been washed away into the Feather River.


Concerned that the entire spillway would collapse, officials closed the main spillway, but the reduction in the flow of water out of the Reservoir led to the topping of the Reservoir, which sent water pouring over the Reservoir’s emergency spillway, located near the main spillway.  The emergency spillway sends water down the raw hillside, and the force of that water severely eroded the hillside itself, creating the risk of a major collapse which could have flooded downstream communities.  Officials were forced to reopen the damaged main spillway in order to reduce the Reservoir water level, and wisely took the precautionary step of issuing the evacuation order.

The evacuation order was rescinded on February 14 and officials seem confident that enough water has now been released, and that they can repair the emergency spillway damage and eventually replace the main spillway – albeit at a cost of $100 million or more.

So what caused the main spillway to fail?  Theories abound.  The soil beneath the massive concrete chute may have lost stability during the recent California drought.  The roots of trees growing along both sides of the spillway may have weakened its stability.  The spillway may have developed cracks over time due to suboptimal engineering and construction 50 years ago.  Or the concrete may have been destroyed by a process known as cavitation.  When water rushes across a concrete surface at high speeds and with tremendous turbulence, tiny air bubbles can deliver great force to the concrete surface and create cracks and fissures that expand and multiply, leading to a massive failure of the concrete deck and the complete erosion of the deck and underlying soil.  Cavitation is believed to be the cause of spillway damage in Iran, Mexico, Turkey and several U.S. States over the last several decades. There are construction techniques – known as aeration – that prevent cavitation, but aeration was not utilized in the 1960s and the Oroville main spillway was not retrofitted with aeration features (a step that may have cost as little as 1% of the cost to replace the now destroyed spillway).         

The potential causes of the Oroville Dam problems are being analyzed now.  We would do well to use the Oroville crisis as a wake-up call to inspect other major dams in the U.S. to determine whether they are also at risk of similar problems.  The risk of failing to detect a similar failure and the potential for a major disaster are too great not to take careful and determined action now.

Posted by Dan Millea

Wednesday, February 8, 2017

Atmospheric Rivers Making Landfall in California and Causing Major Flooding

Last month, several powerful storms hit California, causing widespread flooding in both Northern and Southern California. 
The storms caused multiple rivers to flood in Northern California, including the Russian River in Sonoma County. Southern California experienced record-breaking rainfall in many places, including the Los Angeles Airport. Throughout the state, the storms prompted evacuations, forced thousands to flee their homes, caused mudslides and rockslides, knocked down power lines, uprooted trees, and flooded roads and freeways causing numerous accidents.  At least eight people died. Many of the damages from the storms will likely be covered losses under homeowners’ and commercial insurance policies. 
These storms were atmospheric rivers (ARs). This is a weather phenomenon consisting of water vapor forming over the ocean and being transported in long and relatively narrow regions of the atmosphere (on average 400-600 km wide). 
ARs can create extreme rainfall and major flooding when they make landfall over an area.  According to the National Oceanic and Atmospheric Administration’s Earth System Research Laboratory, a strong AR can transport an amount of water vapor equal to up to 15 times the average flow of water at the mouth of the Mississippi River. 
ARs are particularly significant in the west coast of the United States, where it is estimated that they generate about 30-50% of annual precipitation. A type of AR bringing water from the tropics near Hawaii is commonly known as a “Pineapple Express.” 
In the Golden State, ARs have been responsible for numerous winter storms and multiple floods over the last two decades. For example, from late December 1996 to early January 1997, a Pineapple Express struck Northern California, causing a major flood that became known as the “New Year’s Day Flood,” and resulted in over $1 billion in damages. ARs are therefore very significant events for the insurance industry. 
While ARs can lead to devastating floods, the precipitation they cause is critical to California’s water supply. In addition to heavy rain, last month’s winter storms also brought blizzard conditions in parts of the Sierra Nevada mountain range in Northern California, and significantly increased its snowpack, a key source of water for the state. These ARs have helped alleviate California’s six-year drought conditions – about 18% of the state is now free of drought. 
ARs can now be forecasted. The National Weather Service has techniques that can identify these phenomena and give advance warnings of their presence, 5 to 7 days before the ARs make landfall. Additionally, scientists within the ESRL have developed AR observatories along the west coast, to monitor ARs and improve our understanding of them. It is expected that these advances will help to mitigate the risk of major flood events, and at the same time improve water management decisions in California and the other western states. 
Nevertheless, experts are concerned that, as a result of climate change, ARs are projected to become more frequent and intense. This can result in major insured losses in the west coast.  The United States Geological Survey, Multi Hazards Demonstration Project, has developed a megastorm scenario called “ARkStorm” (for Atmospheric River 1000 Storm), studying the catastrophic impact of a series of extreme ARs in California. We will discuss this scenario, referred to by the USGS as “California’s other ‘Big One,’” in an upcoming post. 
Posted by JosƩ Umbert

Friday, October 21, 2016

NYC FEMA Flood Mapping Creates Insurance Uncertainties

In 2015, as many of its businesses and residents were still rebuilding from Superstorm Sandy, FEMA re-drew the flood map for New York City. The new proposed flood map designated approximately 35,000 additional residential homes and commercial buildings as being in a high risk flood zone. This would have drastically increased flood insurance premiums for thousands of New Yorkers. New York City’s Mayor, Bill de Blasio, promptly filed an appeal contesting the accuracy of the new flood map, claiming that errors in FEMA’s modeling overestimated the size of the 100-year floodplain and the height of the Base Flood Elevations.
On October 18, 2016, FEMA and New York City announced an agreement to revise the flood map, yet again, for New York City. The City also announced that until the new flood map is finalized, flood insurance premiums will be based on the 2007 flood map that were in effect prior to Sandy. The City claimed victory and announced that FEMA’s decision to revise the flood map will save coastal insureds tens of millions of dollars per year. 
Given that the changes proposed by the 2015 flood map would have had the most significant impact on coastal residential properties in Brooklyn, Staten Island, and Queens, it is uncertain how the decision to disregard and revise the flood map will affect commercial property underwriting in lower Manhattan and the rest of New York City. At this point, the only certainty is that the use of the 2007 flood map is temporary. And, while the temporary reliance on the 2007 flood map may lower premiums, insurers should continue to rely on other ways to protect themselves against a CAT when underwriting a risk, such as being more specific in excluding or limiting flood coverage or requiring a larger deductible.   
Inevitable changes to the flood map also raise questions regarding future claims. For example, what if a property that is designated by the 2007 map as being outside the flood zone is later designated to be in a flood zone during the effective dates of the policy? What flood map will insurers use to determine coverage or adjust the loss? Will a new flood map trigger questions about law and ordinance coverage and impact how an insured rebuilds? These questions may be of particular importance to policies that limit coverage to property located in high hazard areas. Given these uncertainties, insurers should take into consideration the exposures from a readjusted flood map when underwriting these risks. 
Posted by Jennifer Hoffman

Tuesday, September 20, 2016

Man-Made Cats

The industrial world destroys nature not because it doesn’t love it but because it is not afraid of it.” 

- Mary Ruefle, American Poet

Most of the major catastrophes we read about, think about and worry about are natural occurrences:  hurricanes, floods, earthquakes, volcanic eruptions.  But man-made catastrophes do their own share of damage.  When they strike, they often grab their own share of attention.  The 9/11 terrorist attack stands as one of the largest insurance catastrophes in history – not to mention its far more devastating human impact.  But most man-made catastrophes are smaller in scale compared to what mother nature can deliver.  They can also stay under the radar, without headlines, without clear cause and effect, without a clearly defined impact.  They can be harder to trace and harder to quantify.  When an earthquake strikes, the resulting damage is apparent and the cause and effect are obvious.  Not always so with man-made events.

Case in point:  in 2015, forest fires and resulting haze in Southeast Asia were unusually widespread and extreme, and researchers this week released a study finding an incredible death toll:  “The forest fire and haze disaster in Southeast Asia last year may have led to the deaths of more than 100,000 people,” the New York Times reported.  “The vast majority of the cases were in Indonesia, where fires were deliberately set to clear land for agriculture.”  In 2015, the Indonesian government claimed only 19 of its citizens had perished due to the fires and haze.  The report released this week finds a much higher figure:  91,600 in Indonesia alone.

The study was published in Environmental Research Letters.  The study’s authors explained the root cause of the fires in 2015 and the resulting impact on human life:
 
Across Indonesia, fires are frequently used to burn agricultural residue, clear forest, or prepare land for plantations and smallholder farms. . . .   Fire emission levels are greatest from degraded peatlands, especially in dry years (Marlier et al 2015a, 2015b). In 2006, burning in industrial concessions to clear land for oil palm and timber plantations accounted for ~40% of total fire emissions in Sumatra and ~25% in Kalimantan (Indonesian Borneo) (Marlier et al 2015c).  
 
                                                             *           *           *
 
The degraded peatlands that typically burn during such episodes contain significant combustible organic material and so release large amounts of fine particulate matter (PM2.5), the leading cause of global pollution-related mortality (World Health Organization 2009, Lelieveld et al 2015). As in previous episodes, the prevailing winds in 2015 transported the smoke to densely populated areas across Indonesia and the Malay Peninsula, including Singapore and Kuala Lumpur.
 
Did most of us hear, in 2015, about the fires, the smoke, and the heavy presence of deadly particulate matter in population centers in Southeast Asia?  Did we hear that deaths were mounting, in the tens of thousands and as many as a hundred thousand?  No.  Nor, apparently, was that reality recognized anywhere before the release of the study in Environmental Research Letters. 
 
Similarly, the predictions of dire consequences for life and property as a result of Climate Change relate not only to high profile catastrophic events – like stronger and more frequent hurricanes – but to the more insidious long-term effects, including slowly rising seas, widespread droughts, and extremes of temperature, all of which cause death and damage that are not as visibly and obviously connected to the “catastrophe.”  But to the victims, the results are just as final.

Posted by Dan Millea