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Weather worries Northeast Hurricane Conference issues warning By Phil Zinkewicz “It’s not a question of if … it’s a question of when.” That message was driven home time and again at July’s Northeast Hurricane Conference, organized by the Insurance Information Institute and sponsored by an impressive list of insurance industry organizations and safety groups. Among the sponsors, in addition to the I.I.I., were: Allstate, the American Insurance Association, Erie Insurance, The Hanover Insurance Group, the Institute for Business & Home Safety, the Insurance Council of New Jersey, ISO, Lloyd’s America, MetLife Auto & Home, the National Association of Mutual Insurance Companies, New Jersey Skylands Insurance Cos., OneBeacon Insurance Group, the Property Casualty Insurers Association of America, State Farm and Travelers. Speakers were not only from the insurance industry but also, and most predominantly, from the world of weather forecasters, atmospheric disturbance evaluators, geologists and other sectors of the scientific community. “Many New Yorkers believe that, unless you live in a place with palm trees and someone playing a ukulele, there’s no danger of a major hurricane,” said New York Superintendent of Insurance Howard Mills. “That’s simply not true. When a major hurricane hits the Northeast—and I emphasize when not if—it will not be a local event or even a regional event. It will be an event of national concern.” One panel discussion, titled “Hurricane Risk in the Northeast,” included: Dr. William Gray, Emeritus Professor, Department of Atmospheric Science, Colorado State University; Philip J. Klotzbach, Research Associate working with Dr. Gray; Karen Clark, President and Chief Executive Officer, AIR Worldwide Corp.; Dr. Nicholas K. Coch, Professor of Geology, Queens College, City University of New York; and Brigadier General (USAF, retired) John J. Kelly, Jr., Deputy Under Secretary for Oceans and Atmosphere, National Oceanic & Atmospheric Administration. Dr. Gray and his assistant Klotzbach described the northeast portion of the United States as being “very lucky” in the last couple of decades. He said that, during the 1940s, 1950s and early 1960s, a good many landfall storms hit the Northeast. However, he said, during the 1970s and 1990s, the hurricane situation was quiet in there. “In the next decade, the probability of a major hurricane hitting the Northeast is one and a half to two times greater than in recent years. We are returning to the earlier decades where landfalls were more common,” he said. Klotzbach said that, in the next few years, the probability of a major hurricane hitting somewhere on the U.S. coastline is 82% and the probability of a major storm hitting the Northeast is 62%. Dr. Coch told the insurance industry audience members that, either they start preparing for major hurricanes along the Northeast or “prepare for bankruptcy.” He continued: “We all know the kind of damage that can result from storm surges. But when storm surges come into urban areas with skyscrapers, the storm surges will amplify those damages. A Category 3 hurricane in New York can have surges similar to a Category 5 hurricane in other areas of the country.” Coch referred to the last major hurricane in New York, which was in 1893, saying that when the winds blew between tall buildings there was a “back and forth” effect. With today’s skyscrapers, that confusion of wind patterns can cause windows to be sucked out, with debris flying all over, he said. “Major hurricanes making a landfall in the northeastern U.S. have a damage potential far greater than storms of similar power in more southern latitudes,” said Coch. “This is because meteorologic, geographic, oceanographic and anthropogenic characteristics in the Northeast magnify storm damage. Hurricanes moving northward along the Atlantic Coast increase significantly in forward speed as they interact with northern air masses.” Coch said that major damage from recent northeastern U.S. land-falling hurricanes was averted because the storms weakened as they passed over the cooler waters north of Cape Hatteras and also made landfall at low tide (Gloria in 1985, for example) or weakened and had eastward recurving tracks that spared Long Island and most of southern New England. However, he added, insurers that confuse frequency with consequence will “lose their shirts.” The Queens College geologist said also that urban areas, such as New York, are vulnerable to major hurricanes in very specific ways. “You might think you don’t have to worry about utilities during a major hurricane because, in New York, they are buried underground and, therefore, would not be subject to wind damage. But salt water can penetrate the ground and can erode cables and pipelines. In addition, natural drainage channels have been built over, so flooding will be amplified. And, urban trees fall over much faster than suburban trees.” Karen Clark addressed the potential cost element of a major hurricane hitting the Northeast. She said that storms hitting this area, although not as frequent as hurricanes in other parts of the country, tend to be large loss events. “Northeast hurricanes tend to be much faster and much more intense than in other parts of the country,” she said. “When they hit land, they do not lose intensity.” She said a mega storm hitting New York could generate $3 trillion in losses overall. “Kennedy airport could be under 20 feet of water and subways and tunnels could be filled with water,” she said. Brigadier General Kelly said that nearly 90% of all presidentially declared disasters are weather related, leading to around 500 deaths per year and nearly $14 billion in damages. He said that the Northeast regions need to plan ahead to reduce their vulnerability to a major hurricane. “Everyone is concerned about hurricanes now because Hurricane Katrina is a recent phenomenon,” he said. “But Americans have very short-term memories. We may not see a major hurricane in the Northeast this year or even the next. But it will come.” Also speaking at the day-long event was Wendy Baker, president of Lloyd’s America. She said that a Northeast hurricane hitting New York could result in insured losses of $65 billion. “The stakes are huge. Considering that Manhattan rail and subway lines often grind to a halt under the burden of three inches of rain, it is frightening to imagine how New York City might fare in a Category 3 hurricane.” However, Baker said insurers should be able to model the impact of natural disasters with some degree of accuracy, so that exposures can be managed and the risks spread. “Last year, we modeled for an industry loss of $60 billion from a Gulf windstorm—right in line with the estimated cost of hurricanes Katrina, Wilma and Rita. “Today, we model for a $65 billion industry loss from a Northeast hurricane making landfall in New York and a $100 billion loss from a hurricane hitting Miami.” Despite paying out a record $5.8 billion after last year’s U.S. hurricanes, Baker said Lloyd’s believes the “vast majority of natural perils are insurable.” At a special presentation on coordinating disaster response, Ray Stone, vice president, Catastrophe Management, St. Paul Travelers, addressed the subject of disaster preparedness. “Experts are forecasting an active hurricane period that can last several decades,” said Stone. “Dr. Bill Gray from Colorado State University predicts that there is a 69% chance of a major hurricane making landfall on the East Coast, including New England. A recent study conducted by the I.I.I., Travelers and other insurance companies revealed that average insured home owners through the Gulf and Atlantic coastal communities have taken just half the steps necessary to best position themselves to recover from a major storm. In fact, only 54% of insured homeowners in the New York metro area know that their homeowners insurance policies don’t cover floods, but only 13% say they have flood insurance. For those surveyed, 79% say that they do not yet have a family disaster plan or kit in the event of an emergency.” Continued Stone: “This conference has been an excellent opportunity for insurance companies, industry experts and emergency officials from New England and other coastal Atlantic states to discuss the potential effects of a hurricane making landfall.” * |
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