Senior Manager, Event Response, RMS
Emily Paterson is a senior manager in Model Product Management at RMS, where she leads the RMS Event Response Service, which responds to real-time catastrophe events around the world, providing products and tools for clients to assess the impact of an event. Since joining the event response team at the end of 2010, Emily has coordinated the RMS response to many significant events, including the Tohoku Earthquake and Tsunami in 2011 and Hurricane Sandy in 2012. Emily joined RMS in 2007, working in the Asia Pacific and Europe teams on model product management prior to joining the event response team. Emily holds a B.Sc. in Statistics from the University of Western Ontario and a M.Sc. in Disaster Management and Sustainable Development from Northumbria University.
Emily Paterson, director – Model Product Management, RMS
Irma has now dissipated to the relief of many, not least those who experienced the storm’s wrath. The actuality of Irma was not nearly as bad as feared, as discussed in my colleague Tom Sabbatelli’s blog yesterday. Irma’s final path spared the major population centers of Miami and Tampa from the storm’s most damaging winds and storm surge.
Prior to and immediately after landfall, before we could see the final path and the actual impact of Irma, the best that anyone can do is look at the range of possible losses — as the final actual loss can only be known after an event is fully over and the details become clear.
To help our clients understand the potential magnitude of Irma’s insured loss during the storm’s approach, RMS provided guidance around what the distribution of potential wind losses looked like. But although we can have a good level of confidence in potential wind scenarios ahead of time, it is only part of the equation. As the hurricane approaches, we can provide guidance on the risk and identify areas that could be affected by storm surge and flooding, but the distribution of potential losses from these perils is uncertain as these losses are highly sensitive to the nuances of the storm’s final track and wind field structure.
Remember that the Saffir-Simpson scale no longer advises on the expected levels of storm surge following Hurricanes Katrina and Ike — storms that disproved the conventional understanding of the links between a hurricane’s intensity and its storm surge potential.
Now that Irma has gone, observations and imagery have started to come in that reveal the storm’s true impact. We are now able to shift our focus from “what could happen” to “what did happen”, from postulating potential wind loss distributions to delving into the hazard — including storm surge and flood — and damage observations to inform our final reconstructions of the event. Ultimately our understanding of the totality of losses from Irma will account for all loss drivers, including those which were too uncertain to estimate ahead of time. Storm surge, flood and other complicating factors, such as the evacuations, business interruption, and the prolonged and extensive power outages, among others, will all play a part in the final outcome.
While Irma has only dissipated very recently, what is already very clear is that Irma is a very complicated and complex event. How the interplay between wind, storm surge and flood plays out in terms of losses, and adding on top the impact of the complicating factors listed above, will ultimately dictate what the final losses will be.
Wind and surge observations from anemometers and gauges go a long way in helping us to better understand the hazard experienced on the ground, and are crucial as we look to reconstruct the hazard from Irma – our first step to understanding the full loss.
Satellite and drone imagery helps us go one step further and gives us a “birds eye view” of the damage experienced, helping to provide a fuller picture of both the type and level of damage, as well as a good indication of the extent. As we inspect the imagery we are looking for things that will help us refine our understanding of losses from this event — how far inland can we see surge damage? Is there roof damage from winds over a large area? We can use these observations to help refine and validate our understanding of loss. Another advantage of leveraging imagery is that it helps inform where we should focus our field reconnaissance efforts.
Figure 1. Map showing Key West Naval Base with photo image of residential area in the top right corner. Source: OpenStreetMap
Figure 2: Residential area near Key West Naval Base, pre-event image from Google Earth, post-event aerial image acquired by NOAA on September 11, 2017
Our “boots on the ground” field reconnaissance approach really helps us refine our understanding with more detailed information. Not only does it help validate hazard observations with damage observations, but conversations with home and business owners, as well as those working on the recovery efforts, gives us insight into the prolonged effects impacting the affected communities, such as lengthy closures of businesses and insight into the types of internal and contents damage experienced by homeowners. Our field reconnaissance plans are already underway and as those field observations come in, they will be fed into our process as well. The more information we have about the damage on the ground, the better our understanding of the full totality of losses from an event will be.
Mark Powell, vice president – Model Development, RMS HWind
Don’t Forget About Potential Tropical Cyclone 10L
While we are all deeply concerned for the well-being of those caught up by rising flood waters in the Houston Metropolitan areas, we still need to monitor the tropical Atlantic for additional activity. Hurricane season activity typically goes up this time of year with the peak approaching in the second week of September.
The National Hurricane Center (NHC) has a new term for weather disturbances near the coast that could develop into a tropical cyclone with little advanced notice. These are called “potential tropical cyclones” and we now have Potential Tropical Cyclone 10L (PTC10L) on the coast of North Carolina. The “Ten L” signifies what would be the tenth tropical cyclone in the Atlantic basin this year, should it develop.
NOAA GOES visible band satellite image of Potential Tropical Cyclone 10L at 22:45 UTC on 28 August.
At the RMS-HWind Forecast Center, we are monitoring Harvey, PTC10L, and a system off the west coast of Mexico, 24/7. The U.S. Air Force Hurricane Hunters flew a reconnaissance mission into PTC10L on Monday afternoon Eastern Time (ET) and found winds near tropical storm strength but a storm circulation center was difficult to identify. Satellite imagery shows most of the deep convection to the east of an elongated low-pressure trough. The system is being affected by strong westerly winds at upper levels that have prevented any alignment between the clouds and the trough. For a tropical cyclone to form, both the convection and the low pressure need to be in close proximity, together with a well-defined cyclonic circulation. This alignment allows the latent heat release from the clouds to help lower the pressure and feedback into stronger, more organized, cyclonic circulation.
There is a 50 percent chance this system will develop, but it is already on the coast and under the influence of a mid-latitude weather system that will steer it along and then past the North Carolina outer banks by this afternoon ET, and then further offshore to the northeast where it should develop extratropical storm characteristics and stronger winds. In summary, PTC10L is running out of time, but could become a short-lived wind and storm surge threat to the North Carolina outer banks.
Elsewhere in the tropics, the NHC has identified Invest 93L, a tropical wave that has just emerged from Africa, with a 70 percent chance of becoming a tropical depression over the next two days. Invest 93L is expected to move westward for the next few days. Next, and possibly the system most likely to become a significant tropical cyclone, is system EP94 in the eastern Pacific, which NHC assigns an 80 percent chance of development, potentially impacting southwest Mexico and Baja California del Sur over the next few days.
Meanwhile Tropical Storm Harvey is still sitting offshore Texas but is experiencing strong shear that will prevent it from regaining Hurricane status before moving inland into Louisiana on Wednesday. Unfortunately, there is no immediate respite from the rainfall in the Houston area.
Monday, August 28
Update at 23:00 UTC
Pete Dailey, vice president – Product Management, RMS
Historical Context of Flooding In Houston
According to underwriters and loss engineers, flood claims from Harvey are likely to be lower for policyholders that have had recent experience with a hazard such as flooding. This is due to the knowledge gained on how to mitigate water damage that occurred during a prior event.
As recently as two years ago, residents in the Houston area experienced major flooding when an extreme rainfall event took place during the last week of May 2015. The duration of the flooding persisted for weeks, into the month of June. In April of last year, record breaking rainfall once again brought damage to Texas with more than 1000 properties in Harris County alone.
While these flood events were not as severe as Tropical Storm Allison in 2001, Houston’s resiliency against catastrophic flooding is now being tested for the third year in row. Hurricane Harvey is shaping up to be the toughest challenge yet, with massive amounts of rainfall as well as wind driven coastal flooding (storm surge), and the compounding impacts of multiple sources of flooding within the same region.
Despite a lack of flood insurance penetration nationwide, the availability and uptake of flood coverage is slowly on the rise as the private flood market expands. Texas is among a handful of states where private insurance companies have established some traction for a new line of flood insurance products.
Based on review of National Flood Insurance Program policy coverage data that RMS obtained from FEMA (obtained through a Freedom of Information Act request), the counties impacted by Hurricane Harvey have not had a historically high penetration of flood insurance. However, with minor growth of the private flood insurance market and this region’s recent experience with catastrophic flooding over the past several years, it is reasonable to assume that the trend is for increased insurance penetration in the greater Houston area.
Ben Brookes and Daniel Stander, vice presidents at RMS
25 Insights into Hurricane Harvey
Harvey remains an ongoing event with much uncertainty. But what do we know so far? Here are our top 25 insights…
Not a Wind Event?
Harvey is not primarily about wind. Yes, there’s severe wind damage in Rockport, with many houses and commercial properties destroyed. But generally, there was limited exposure in the path of the highest winds. Preliminary track selections suggest wind losses in the low billions of dollars.
Like Sandy, Harvey is a water, not wind, event. Flood losses will likely overtake wind losses. The floods are ongoing. It will take days to accurately quantify the total amount of rainfall, and longer for water losses to become clear.
Coastal, not Coastal?
Unlike Sandy, however, losses from this coastal event will not be driven coastal surge. RMS storm surge accumulation files will be posted tomorrow morning once we have completed additional work on the surge depths. Irrespective of this, it seems clear that flood losses from this “coastal” event will be dominated by “inland” flood.
Homeowners Exposed by Protection Gap?
Even in a market as mature as the U.S., much flood risk is not insured. The consequences will be shouldered by homeowners, many of whom are simply unaware of their flood risk and/or their lack of flood coverage. Yes, large losses could flow into the reinsurance markets if the floods continue to build at the rate seen in the last few hours. However, Harvey will bring the issue of the “protection gap” back to the top of the political agenda.
Taxpayers to Foot the Bill?
Economic losses from Harvey will outstrip insured losses by a considerable margin. The impacts will be borne in the first instance by the affected municipalities and by the federal government. One way or another, though, the bill for Harvey will ultimately find its way to the taxpayer.
Stock Markets Already Impacted?
Harvey has already affected share prices. Allstate, the largest publicly-traded residential insurer in Texas, was down 1.5% in the two hours before close on Thursday. That’s over $500 million off the value of the company a full 36 hours before landfall.
Landfall Location Could Have Been Worse?
The City of Houston has a population of 2.3 million. The Houston metropolitan area has 6.5 million. Corpus Christi, which endured the worst of the wind, has only 325,000 inhabitants. Bad for Corpus Christi, yes. But from a national perspective, the situation is actually better than it might have been. Hard to imagine, but had Harvey made landfall 200 miles further up the coast, the picture would be even more catastrophic.
A Near Miss for the Bond Market?
Investors in the Mexican government’s $290 million cat bond (FONDEN) may have had a lucky escape. Initial pressure values are just enough to avoid a loss. But there’s only six millibars in it and these values are subject to revision. So, it remains possible that this deal could trigger. Remember Hurricane Odile: storm chaser data led to a significant adjustment of the preliminary values.
A Profit-Impact Storm for Primaries?
Harvey will likely concern primary insurers more than reinsurers. And even then, it looks more like an event affecting annual profits, rather than one impacting solvency for primaries. This could change, though. And if flood losses are large, Harvey could become an earnings event for reinsurers too.
Cat Budgets Able to Absorb Harvey?
Insured losses from catastrophes in the first half of 2017 were a full 30 percent below the ten-year average – just $23 billion versus the $33 billion average. This means that reinsurers’ cat budgets are likely able to absorb claims from Harvey. Of course, that budget could yet be exhausted if insured losses escalate due to rising floods.
Not a Market-Turning Event?
Harvey’s course, the fact that little flood risk is carried by the private insurance market and the current capital strength of the industry all means that the storm is unlikely to cause U.S. property premiums to spike. Reinsurance capital levels look set to remain abundant.
Beware Zip Code 78407?
The highest insured exposure density for wind appears to be in zip code 78407 in Corpus Christi. Of course, a high density might be associated with a concentration of high-value, highly-engineered buildings that may not be vulnerable to Cat 4 winds. However, those who have underwritten a disproportionate share of business in 78407 might wish to take a closer look.
A Year’s Worth of Rainfall in a Few Days?
South-eastern Texas will likely receive upwards of 24 inches (61 centimeters) of rainfall, with certain locations potentially accumulating over 36 inches. Some forecasters predict localized rainfall totals of up to 40 inches. Contrast this with Corpus Christi’s average annual rainfall of about 32 inches.
A 1-in-100 Precipitation for Houston?
RMS estimates Harvey’s precipitation extremes have a return period of 100 years in Houston. In other words, the rainfall anticipated over Houston has a one percent chance of occurring there in any year. The annual likelihood for Corpus Christi’s expected precipitation from Harvey is 0.3%, or 1-in-350. Of course, a 1-in-350 rainfall level does not necessarily lead to a 1-in-350 loss. However, such extremes over such a broad area create the potential for widespread catastrophic flooding.
More Flood Protection in Rockport and Corpus Christi than Houston?
Flood losses in some of the worst hit coastal areas could be largely protected by the National Flood Insurance Program (NFIP). Aransas County (Rockport) shows a NFIP penetration rate for “high risk” areas of 88 percent. Over two-thirds of high risk areas in Nueces County (Corpus Christi) appear covered by NFIP. Elsewhere, though, the picture is more concerning for homeowners. Only 28 per cent of high risk locations in Harris County have NFIP policies. Worrying as Harvey continues to track northeast.
Harvey Is No Ike?
Harvey has been intense, but remains relatively compact. Our analyses estimated an Integrated Kinetic Energy of 27 terajoule (Tj) at landfall. Compare this with 140Tj for Hurricane Ike and you get a sense of the difference in scale. Ike had five times the energy of Harvey.
It’s Raining Like Allison?
But Ike didn’t stall over the coastline and dump a year’s worth of rainfall in a matter of days. Every storm is different. Harvey’s legacy will likely be eclipsing Tropical Storm Alison’s torrential rain, and thereby causing one of the largest floods ever seen.
The combination of wind, rain and surge may make it difficult for adjusters to clearly identify the causes of a given loss. This heightens the potential for uninsured water damage to be paid by wind-only policies. Unable to distinguish loss source, insurers will need to account for inadvertently picking up some flood claims under wind policies.
Analysis of our offshore platform data reveals that roughly 10% of Gulf of Mexico Offshore energy assets could have been affected by Harvey. That equates to more than $20 Billion in rigs, platforms, wells, pipelines. The degree of damage will take some time to emerge as structures can only be surveyed once the danger passes. Again, though, a track further round the coast would have hit many more platforms, as Ike did.
Onshore Risk Greater?
Water, not wind, might end up driving industrial losses. It could take 18 to 36 months for onshore refineries to return to full production capacity if they sustain just two feet of flooding, suggests the Bay Area Houston Economic Partnership. A distinct possibility given levels of rainfall being forecast.
Coastal Industry’s Losses May Trouble Reinsurers?
The Texas coastline has numerous industrial facilities which could have experienced both wind and surge damage. These losses may well flow through facultative policies into the reinsurance market generally and Lloyd’s specifically. RMS is carefully studying our databases of industrial facilities alongside reconnaissance imagery to better assess the likely impacts.
Jeff Waters, product manager – Model Product Management, RMS
As Harvey continues to meander over southeastern Texas, pumping band after band of moisture onshore, many cities and towns are braced for what could be the worst flood event in the state’s history. Multiple computer models continue to forecast widespread rainfall totals of between 10 to 30 inches (25 to 76 centimeters), with localized areas expected to see up to 40 inches (101 centimeters).
Exacerbating the situation further is the ongoing threat of severe weather – notably tornadoes – driven by Harvey’s counterclockwise rotation and relentless movement of moisture and convection onshore. On Saturday, August 26, there were 12 preliminary tornado reports in southeast Texas. That threat is expected to continue into Tuesday as Harvey remains nearly stationary over the region.
How will all this impact the (re)insurance industry? This remains to be seen, as there are numerous factors still at play. During a live Q&A session on Twitter yesterday, we explained how the combination of high winds and storm surge could make it difficult for claims adjusters to determine the cause of loss for damaged properties. As a result, “coverage leakage”, where water-driven losses are sometimes paid under wind-only policies due to the inability to distinguish loss sources, may become a key factor in this event. It is also important to monitor National Flood Insurance Program (NFIP) participation, especially given the newly established $1 billion reinsurance program. However, it is worth noting that NFIP take-up rates are low in southeast Texas, increasing the likelihood of material uninsured losses.
It is obvious that there is no shortage of factors and impacts to monitor in the coming days. During this time, RMS will continue to keep you informed of new information as it becomes known.
Pete Dailey, vice president – Product Management, RMS
Harvey Likely to Hit NFIP With High Volume of Claims
While some residents living along the Texas shoreline begin to recover from the intense winds and storm surge from Hurricane Harvey, those located inland are still in harm’s way. Harvey has stalled over southeastern Texas, and forecasters at the National Hurricane Center (NHC) continue to predict that some locations will receive upwards of 24 inches (61 centimeters) of rain. Many inland locations will receive their typical annual rainfall within just a few days, a situation likely to cause widespread and catastrophic flooding.
This event comes at a tumultuous time for the nation’s top provider of flood insurance, the National Flood Insurance Program (NFIP). Heading into this year’s hurricane season, the NFIP carries significant debt, which exceeds $20 billion largely due to claims following Hurricane Katrina (2005) and Sandy (2012). This presents a major challenge for U.S. legislators returning from their summer recess as the NFIP will expire on September 30, unless Congress appropriates additional funding.
For private flood insurance, the market is relatively small and offers limited policy choices outside of NFIP. Many homeowners are also simply unaware of their flood risk and, if they live outside a high-risk flood zone, may not realize they lack flood coverage on standard wind policies.
To better manage its risk and partially protect itself from massive flood losses, FEMA (which manages the NFIP) announced in January that 25 reinsurers would cover 26 percent of losses exceeding $4 billion up to a limit of $8 billion. So, for a major event that produces $8 billion in flood claims, reinsurers will cover just over $1 billion of the loss. This risk transfer is critical to managing the NFIP given its current debt load and borrowing limits.
Is it possible that Harvey will produce at least $4 billion in flood claims and trigger the NFIP reinsurance program? That remains to be seen, but it does appear the likelihood is quite high. For some historical perspective, Hurricane Katrina resulted in $16.3 billion in NFIP claims, and Hurricane Sandy resulted in $8.3 billion. Katrina was a major hurricane at landfall as was Harvey, but significantly larger in size. Much of Katrina’s flood loss was related to levy failure. Sandy was not a major hurricane at landfall, but given its extra-tropical characteristics it dropped heavy rainfall combined with severe coastal surge in the highly exposed Northeast Corridor.
Will the level of NFIP claims from Hurricane Harvey see a repeat of Katrina or Sandy? While Harvey is not as large as Katrina, and is not positioned over the dense exposure of the Northeast as with Sandy, here are four points why it is perhaps the “perfect storm” from a flood risk point of view.
First, Harvey spent considerable time over the Gulf of Mexico as it strengthened and grew, capturing a tremendous amount of moisture. Second, the late-summer jet stream is displaced to the north, allowing Harvey to stall in the absence of steering currents, and drop heavy rain for an extended period. Third, the storm’s slow and meandering track has further extended the time it has had to accumulate moisture. Lastly, the alignment of thunderstorm cells with Harvey’s low-level airflow are producing a phenomenon called “cell-training” in which successive cells of torrential rain relentlessly impact a location.
It will be some time before Harvey stops dropping flooding rains, and homeowners and adjusters begin assessing the damage. Once claims begin to flow into the NFIP, a clearer picture of the total loss will follow. What we do know today is that Harvey has the potential to cause catastrophic flooding across a large portion of Texas. As the NFIP comes up for reinstatement in October, and the reinsurance program comes up for renewal in January, Hurricane Harvey will clearly be a pivotal topic in the debate over the future of the NFIP.
As of today, Sunday August 27, the official NHC forecast shows Harvey moving southeastward and re-emerging over the Gulf, picking up additional moisture, then slowly meandering northward over eastern Texas. This could mean several more days of heavy rainfall over already flooded communities. RMS will continue to provide updates as the story develops.
Mark Powell, vice president – Model Development, RMS HWind
The RMS-HWind team have been conducting continuous 24/7 monitoring of Hurricane Harvey, and are monitoring a weather system that is expected to develop into a new tropical depression off the coast of Georgia.
As long as a storm maintains sustained tropical storm winds over 39 mph (62 kilometers per hour), which can contain damaging gusts as well as force storm surge, RMS-HWind will release a set of products documenting the wind field, and despite Harvey being inland for a day and a half, tropical storm winds continue along the coast and inland. For this new system off the Georgia coast that we are watching, known as Invest 92L, buoy and satellite measurements indicate gale force winds are present but the circulation center is being affected by wind shear and is not yet close enough to deep clouds for a tropical system to develop.
Harvey will continue its slow motion and may emerge back over the Gulf of Mexico on Tuesday so it is expected to maintain itself as a Tropical Storm with no significant motion inland until Wednesday.
Harvey is shaping up as a catastrophic rain flooding event, with water rescues going on all around the Houston metro area. The NOAA Weather Prediction Center reports rainfall totals exceeding 24 inches (61 centimeters) in some locations. These conditions are forecast to persist for several days with another 18-24 inches of rain possible in southeast Texas. Spiral rainbands continue to move in from the Gulf exacerbating the flooding and adding an additional threat from tornadoes.
RMS hurricane risk expert, Tom Sabbatelli, interviewed on BBC News after Hurricane Harvey makes landfall in Texas
Update at 23:30 UTC
Tom Sabbatelli, hurricane risk expert, RMS
With maximum sustained winds of 130 mph (209 kilometers per hour), Hurricane Harvey made landfall near Port O’Connor, Texas overnight as a Category 4 storm. Our industry knew it was only a matter of time before the prolonged U.S. major hurricane landfalls would end, although just days ago few would have anticipated Harvey to be the storm to end it.
It’s “all hands on deck” this Saturday for the RMS Event Response team, pouring over the latest wind, storm surge, and rainfall reports. Today’s goal is to build upon yesterday’s pre-landfall stochastic event selection. Harvey adds an extra layer of complexity, with a uniquely slow and meandering forecast track along the coast. Past hurricanes have traversed on paths straight through Texas, extending swaths of damaging winds much further inland.
This complexity increases the sensitivity required in event selection, as events with longer wind footprints could cause damage in heavily populated metropolitan areas, such as San Antonio, expected to be spared by Harvey’s worst. With careful filtering of track and event parameters, the team has isolated stochastic events closely resembling the latest forecasts, including tracks that stall along the coastline and even loop back around towards the east.
As yesterday’s stochastic event selection already considered a number of major hurricane landfall scenarios, today’s updated selection does not significantly alter the range of industry losses associated with the scenarios. At this time, industry guidance continues to suggest insured losses in the low, single-digit billions, with some higher end estimates becoming less likely.
However, it will still be several days of analysis and reconnaissance until the full impact on our industry becomes clearer. What’s assured at this point is that economic damages from Harvey will dwarf insured losses. Catastrophic amounts of rain have fallen just within the first 12 hours of Harvey’s landfall, with similar rainfall rates expected for several more days. We continue to monitor the latest developments as the RMS Event Response team executes its real-time hurricane processes through the weekend and the week ahead.
Michael Kozar, senior modeler – Model Development, RMS
Hurricane Harvey made landfall last night on the Texas coastline at approximately 03:00 UTC with estimated maximum sustained winds of 130 mph (209 kilometers per hour) based on measurements from the Air Force Reserve Hurricane Hunters. Harvey was an intense but relatively compact storm at landfall, with hurricane force winds not extending much further than 40 miles from center. Our HWind analyses estimated that Harvey had 27 terajoule (TJ) of integrated kinetic energy at landfall. Compared to recent storms that affected Texas, Harvey had stronger peak winds, but less overall kinetic energy than Hurricanes Ike and Rita, both of which were larger storms with more than twice the integrated kinetic energy in their wind fields. In fact, Hurricane Ike contained more than 140 TJ at one point prior to its landfall in 2008.
Since landfall, Harvey’s peak winds have fallen off, but at 1200UTC, nine hours after landfall, Harvey was still a hurricane. Harvey’s structure has remained remarkably well in tact over Texas, and an eye was clearly visible on satellite past 1100UTC. Radar continues to indicate that Harvey is maintaining a tightly wound central core, with intense rain bands stretching into the Houston and Galveston area.
As expected, Harvey’s forward motion has slowed considerably since yesterday. The storm is still drifting to the NNW, but as the steering flow continues to collapse, Harvey will likely meander over eastern Texas well into next week. The potential exists that Harvey could reemerge briefly over the Gulf of Mexico next week, making a second landfall as a much weaker storm on the Texas coastline. Regardless, tropical storm force winds will likely continue for the next few days, and torrential rainfall will persist long after that.
Widespread flooding is expected across much of eastern Texas over the next several days. Rainfall amounts in Galveston already have exceeded 2.5 inches based on National Weather Service gauge data. Further to the southwest, where the center of Hurricane Harvey came ashore, Texas Mesonet stations have measured more than 8 inches of rain, and National Weather Service radar suggests precipitation totals already may have exceeded one foot in some regions. By the time Harvey finally dissipates, more than two to three feet of rain will likely fall, with some localized areas potentially reaching 40 inches of total precipitation.
Hurricane Harvey has made landfall and is the most powerful hurricane to make landfall in mainland U.S. in a decade. This region is also critical for the country’s oil and gas industry, home to key refineries and the fourth largest port in the U.S. (Corpus Christi). While the storm continues to pose a significant threat to people and onshore properties in the next few days, the oil and gas industry is nervously awaiting news on how their offshore assets fared in the storm’s wake.
Analysis of the RMS Offshore Platform Exposure database reveals that roughly 10 percent of Gulf of Mexico Offshore energy assets, valued at more than $20 billion, including drilling rigs, oil and gas platforms, wells, pipelines, etc., could be affected by Hurricane Harvey if it indeed followed the National Hurricane Center’s forecast predictions.
What could be the worst-case scenario? For comparison, Hurricane Ike in 2008 tracked a path parallel to Harvey 200 miles north as a Category 1 storm. It destroyed more than 100 platforms and rigs, collapsed 250 oil and gas wells, and led to more than $6 billion in offshore energy losses.
While most of the offshore energy exposure is farther away from Harvey’s predicted area of highest winds, damage to offshore infrastructure is driven primarily by waves. So even platforms far away from the storm’s track can be adversely impacted by damaging waves. The magnitude of wave impacts depends on the water depth at the platform’s location, with the highest impacts often observed in the “hot zone” – shallower water depths of 200 to 400 feet on the right side of the storm track. In Harvey’s case, the hot zone borders an area rich in offshore platforms. So, it all depends on how long the storm stalls before making landfall and if it is long enough to generate high waves in the Gulf.
Farhana Alarakhiya, vice president – Products, RMS
Its 9:28 p.m. EST and there is a flurry of “Slack” messages going on within the RMS(one) solutions product team to ensure our clients understand fully the impact of Harvey especially since it just got escalated to a category 4 storm. Since news hit of Harvey, clients have been able to leverage Risk Analysis Profiles (RAP) to quickly visualize the potential impact so they can better prepare and also advise key stakeholders.
One of the key distinctions of Exposure Manager is the ability for clients to take the RAP to identify potential hotspots of exposure with these assumptions. As you can see in the image below, clients can quickly understand potential loss by zipcode to this single event and also have the ability to drill down even further into details. Additionally, clients will be able to account their own view of risk by adjusting the RAP; by default the RAP provided has damages set to 100 percent, but clients can adjust this view and define their own view of risk to further refine the insights.
As the event progresses, new RAPs will be made available which will represent the latest information in terms of where Harvey actually makes landfall and tracks, and where the Hurricane is forecasted to travel so clients can continue to adjust and update with real time insights.
Post event, we will load a shapefile footprint of Harvey’s actual track into client environments. This shapefile footprint will be banded by observed wind speed and clients will now be able to determine the damage associated with each wind band for use with accumulations on their exposure to start estimating losses to this event.
Pete Dailey, vice president – Product Management, RMS
Harvey to Deliver Massive Rainfall
As Hurricane Harvey races towards Corpus Christi, Texas, it provides an important reminder of the wide range of hazards embedded within a tropical cyclone. While it appears that the hurricane will make U.S. landfall with the strongest winds in over a decade, an equally compelling story will be told by the precipitation left behind by this storm.
Forecasters predict that portions of southeastern Texas will receive upwards of 24 inches (61 centimeters) of rainfall, with some locations potentially accumulating over 36”. Contrast this with Corpus Christi’s average annual rainfall of about 32” – Harvey could produce a year’s worth of rainfall in just a few days! This poses widespread potential for catastrophic flooding. RMS estimates the precipitation extremes in Harvey have a return period of 350 years (annual likelihood of 0.3%) in Corpus Christi and 100 years (annual likelihood of 1%) in Houston.
 Note, a 100-year precipitation event does not necessarily translate into a 100-year flood loss event. Due to the complexities of river networks, floodplain topography, soil conditions, and many other factors, the estimation of flood loss requires sophisticated hydrodynamic modeling and massive computing resources.
Michael Young, Head of Americas Climate Model Product Management, RMS
Collecting Real Time Field Data
One of the challenges that we always face in hurricane event response is having enough wind observations to create a complete picture of the windfield to use in our modeling activities. This year, we are happy to announce that HWind is now ingesting data feeds from the Texas Tech Hurricane Research Team (TTHRT) Sticknet platform. Texas Tech University has a set of 24 mobile anemometer data units that can be rapidly deployed in advance of a storm. Led by Dr. John Schroeder, professor at the National Wind Institute, a team to graduate students and laboratory staff figure out where the storm is headed and drop an array of these instruments in advance of the storm making landfall
There is definitely an art to this kind of real-time deployment, and I have a lot of respect for these researchers. As seen in this figure from our HWind QC application, the TTHRT team has now successfully deployed 14 Sticknet instruments (yellow flags) between Corpus Christi and Port O’Connor which are already starting to register gust wind speeds of 60 mph as of 4 pm CDT August 25 – still hours prior to landfall. These instruments are going to be very useful in capturing the peak wind speed at landfall.
The TTHRT team has now retreated back to Corpus Christi to ride out the storm. Stay safe – guys!
Michael Kozar, senior modeler – Model Development, RMS
The new RMS HWind forecast track product helps clients visualize the forecast uncertainty of an ongoing tropical cyclone.
In this example shown above, the shaded field shows the probability of the center of Hurricane Harvey being within 50 nautical miles of a certain position based on a large array of available forecast models. To complement the gridded cloud of probabilities, we also extract selected probabilities at selected population centers in a table at the top of the plot.
Finally, overlaid on top of the shaded probabilities, we present five specific track scenarios for Harvey that are representative of the underlying models. These five scenarios have their own probabilities and each scenario provides important timing information across the probability cloud so clients can have an estimate of when hazards may occur.
Michael Kozar, senior modeler – Model Development, RMS
The RMS HWind team in Tallahassee, Florida continues to monitor Hurricane Harvey as it approaches the Texas coast this morning. At 12:00 UTC or 7 a.m. CDT, Hurricane Harvey had peak sustained winds of 110 mph (177 kilometers per hour) based on Stepped Frequency Microwave Radiometer (SFMR) observations aboard the Air Force Reserve Hurricane Hunters. Tropical storm force winds are just reaching the Texas coastline now, and wind speeds will only continue to increase as Harvey closes in.
Hurricane Harvey began to rapidly intensify from a disorganized tropical storm on Thursday morning, achieving hurricane status that same afternoon. Intensification slowed Thursday evening as a secondary eyewall formed. However, that respite was short-lived as Harvey’s maximum sustained winds increased by nearly 30 mph (48 kilometers per hour) overnight.
Intensification is expected to continue in the immediate future as Harvey continues to move through a favorable environment with warm ocean temperatures and low vertical wind shear. In fact, the latest satellite images show warming cloud tops near the center of Harvey, indicating that an eye is beginning to clear out.
Harvey is expected to continue on a somewhat slow northwest heading, with landfall expected near Corpus Christi later tonight. After making landfall, Harvey is expected to slow to a near halt, as steering currents weaken. This nearly stationary position along the Texas coast will keep Harvey from moving very far inland and will enable the storm to maintain itself longer than most hurricanes after landfall. As such, Harvey will continue to produce damaging winds and extreme rainfall over eastern Texas after its initial landfall. Rainfall amounts, which likely will exceed one to two feet in some regions, coupled with storm surge will likely produce significant flooding damage both at the coast and further inland over the next several days.
As Harvey continues its march towards Texas, the RMS HWind team will continue to monitor the storm, taking in valuable observations from surface stations and aircraft reconnaissance to provide clients real-time wind information at least every three hours.
Ben Brookes, vice president – Capital Markets Solutions, RMS
Until yesterday evening, Harvey looked like a rain-flooding threat, largely likely to landfall as a tropical storm or weak category 1 hurricane. With its potential to stall over the coastline, that scenario could have been dangerous, particularly for those local communities with significant flood risk.
The situation now looks more concerning: Harvey could become the first major hurricane to make landfall in the U.S. since Wilma in 2005, some 12 years ago. This would add wind and storm surge threat to the rainfall-driven flood risk we were already worried about.
These are the moments we try our best to prepare for. The well-oiled RMS machinery moves into action as the Event Response and hurricane modeling teams keep a close eye on the forecasts, and we try to pull together the best possible insights for our clients.
Our first meeting to select possible storm tracks starts early. This is where we review the modeled storms selected by our scientists, to see which might be the best representations of how Harvey could play out.
At this stage, we’re looking at wind damage only.
There’s a buzz in the air – with a near miss last year, Hurricane Matthew reminded us what it felt like to go into full event response mode. Now we’re back together again, unusually early in the season for a possible major hurricane.
There is a sense of growing meteorological intrigue, coupled with the concern that lives and livelihoods are at risk thousands of miles away. I hope the local communities are prepared and are getting to safety. A lucky streak of no major hurricanes in over a decade also means the memory of the threat has probably faded in those areas. We hope not.
We discuss the exposure on the ground – it looks like Harvey is bearing down on areas of less dense exposure, and we note that unlike Matthew, a shift left or right from the current track won’t change that dramatically. But the big exception is Corpus Christi and the smaller towns along the coast which may be vulnerable to potential storm surge as well as wind. Our analysis also suggests industrial clusters in the region could face wind and flood damage.
We close the meeting hoping this is another dodged bullet for our industry. Our selection of scenarios suggests something in the low single-digit billions is most likely from wind damage. Low-attaching industry loss warranties could be at risk if the situation worsens dramatically, but that’s not the most likely outcome. What are the chances of that? Not high. Looking at the loss distributions based on this this morning’s event selection, using National Hurricane Center forecasts, we estimate there’s only a 10 percent chance that wind loss could exceed U.S. $6 billion. Although it probably won’t happen – it’s possible, clearly.
But look at the bigger picture. Our selection of possible Harvey wind scenarios contains much less damaging storm developments, including those with industry losses of less than $1 billion.
The RMS Capital Markets team have been busy looking into the potential impact on the cat bond market – at the moment we have our eyes on FONDEN, with its parametric trigger extending from Mexico up the Texan coastline. If the central pressure of the storm drops significantly and it hits the box, that deal could be at risk. Likewise, we note a Res Re class with elevated attachment probability – albeit only slightly. Interestingly, at this point we don’t see the Alamo deals looking at risk. The relatively high attachment points might explain that. The situation will become clearer as the event unfolds, of course.
As the hurricane develops, our updates should give more insight on storm surge and inland flooding, which could be the dominant drivers.
Satellite Imagery Showing Better Organization of Cat 1 Hurricane Harvey
As an official RMS client advocate and Meteorologist, and an unofficial extension to the RMS Event Response team, I sit at home in New Jersey having just reviewed the 11 p.m. ET (24 Aug) National Hurricane Center’s official update, which holds the wind steady at 85 miles per hour, pressure at 973 millibars; however the satellite imagery is showing some better organization of Cat 1 Hurricane Harvey…do I sleep tonight?
The next NHC advisory is at 5 a.m. ET, and I’ll be awake (did I sleep?) to see where the storm is headed, but more importantly, how has Harvey strengthened in the last 6 hours, ready to discuss with the RMS Event Response team by 5:30 a.m. ET about what is the official course of action and key deliverables RMS will communicate in just a few hours time to our eager client base.
We all had a bit of a practice run with Hurricane Matthew (2016). Harvey definitely has our collective consciousness and we are deeply focused to help our clients.
Matthew has now made its exit and work begins on the RMS loss estimate
By Tom Sabbatelli, RMS hurricane risk expert
Although it may be too soon to define Hurricane Matthew’s legacy, it will surely be remembered for keeping the insurance industry on tenterhooks for a few days. Having eschewed the U-turn that had been anticipated by many forecast models, Matthew adopted post-tropical characteristics early on Sunday morning, while tracking due eastward off the North Carolina coast. With Matthew’s exit, the fears of another blow to the regions that had already been hit hard by its first impact were put to bed.
So now we have initiated the next phase of RMS Event Response operations, with our attention shifting from the regular, reactive stochastic event selections to a comprehensive interrogation of all causes of loss – both modeled and unmodeled. It is this work that will form the basis of the RMS official industry loss estimate.
Our vulnerability modelers, who make up our reconnaissance teams for Matthew, are on their way to southeast U.S. and The Bahamas. The team traveling to the southeast U.S. are likely to find the damage there is less severe than many forecasters feared prior to landfall. The fact that the storm stayed offshore for so long undoubtedly helped to reduce the potential losses across the region. Nonetheless, Matthew’s high moisture content and slow movement up the coast has caused significant and widespread flooding, driven by a powerful combination of heavy rainfall, historic wave heights, and significant storm surge.
Observations from Jacksonville, Florida and Charleston, South Carolina, as the storm passed over each city, revealed record-setting precipitable water levels. Supported by this unprecedented atmospheric moisture, Matthew produced rainfall totals in excess of one foot in many areas, including up to 15 inches of rain in Cumberland County, North Carolina.
Here the antecedent conditions were already at their peak even before the storm, due to recent heavy rain events that had deluged the region. The combination of rivers in the area already near flood stage level and the already heavily saturated soils, produced an increased susceptibility for each nuanced type of surface flooding to occur.
The antecedent conditions are essential inputs to defining the flood waters associated with this event.
While the damageable surge and wave will make up a large proportion of our modeled flood hazard, the modeled impacts of the inland flooding will be difficult to fully differentiate until our reconnaissance team have collated more observational data. Some features of this event such as dam breakage are considered a non-modeled component of this event, despite their ongoing impacts to the damage still occurring in the area.
Commercial Versus Residential Losses
RMS expects that the losses to commercial lines will be the primary driver of total flood insured losses, predominately through multi-peril or all-risks policies. We expect that the contribution to insured losses by residential claims will be limited because a proportion of the residential property losses will be covered by the National Flood Insurance Program (NFIP).
As of July 31, 2016, there were approximately 417,000 NFIP policies in-force in Georgia, South Carolina, and North Carolina. Penetration of NFIP coverage varies significantly by distance to the coastline. In coastal regions it can be as high as 25 per cent in some areas, while inland participation can be less than 1 percent. This means that although much of the storm surge-driven coastal flood losses will be covered to some extent by the NFIP, many flood-related losses further inland are expected to be uninsured.
Damage and Loss in the Caribbean
Although Matthew’s strongest winds stayed offshore in the U.S., which is likely to limit economic and insured losses, the same cannot be said for parts of the Caribbean, notably Haiti, Cuba, and The Bahamas. The RMS reconnaissance team visiting The Bahamas expect to see damage caused by high winds, storm surge, and record rainfall.
Based on reports and observation data to-date, storm surge and rainfall-induced flooding will likely drive damage in The Bahamas and other parts of the Caribbean, such as Cuba and Haiti – although for Haitians, obviously, the main concern at the moment is the terrible loss of life. Insurance penetration rates in The Bahamas are lower than those of the U.S.; however, the RMS reconnaissance team will be paying particular attention to the hard-hit islands of New Providence and Grand Bahama, home to approximately 85 per cent of the country’s insured exposure.
Calculating the RMS Loss Estimate
The insights gleaned from our reconnaissance trips will prove extremely valuable in complementing our work towards developing an industry loss estimate.
As the Event Response team now transitions from producing real-time event updates, the instrumental observations of wind and flood depth measurements they will continue to gather in the coming days will be fed into the reconstruction of Matthew’s wind and storm surge footprints. And the thorough investigation into Matthew’s damage begins as we aim to provide the insurance industry with a comprehensive review of Hurricane Matthew’s impact.
(end of Monday update 1)
Saturday, October 8
Today’s RMS response to Hurricane Matthew
By Ben Brookes, head of the RMS capital markets team; Emily Paterson, head of RMS event response; Dr Paul Wilson, RMS expert in hurricane and storm surge risk.
All times in this post are London, England
It’s not been often in the last 10 years that any of us have needed to set a Saturday morning alarm to catch the early National Hurricane Center (NHC) advisory for a powerful storm close to land. Thankfully, we’ve had a long streak of no major hurricanes hitting the U.S., so it’s something of a blast from the past to be back in major hurricane response mode over a weekend!
A minute or two of hitting the f5 key, and the latest is in. While the loss of life in Haiti is sobering reminder of the power of these storms, it seems the drought of major Florida landfalls continues: Matthew has continued to “stalk” the Florida coastline as the more dramatic headlines report, but it has not come ashore in the state. The track has taken it further north overnight, as anticipated, and now all eyes are on whether Matthew might have become the first land-falling hurricane in Georgia since the late 1800s
As hurricane modelers gather in the office this morning, many of whom look like they may not have been home, but revitalized by a large tray of coffees, the storm appears to be coming ashore in South Carolina. But it’s going to need a clearer picture of the inner structure of the storm before we know for sure. As yet the NHC is not reporting a landfall, but the Hwind snapshots should give us clarity soon. Whether we see a landfall next week after a loop back around is also the source of much debate. And a point of interest for the industry too – will this be one loss or two? (See yesterday’s Q&A further down this blog thread for more on this).
Our collective task this morning is to update our stochastic selection – choosing scenarios from the model that continue to represent the range of possible outcomes from Matthew, to help our clients understand the range of possible outcomes for their businesses. Once again, we’re not attempting to estimate the industry loss that this storm has caused (or more accurately, is continuing to cause), that process will begin when the storm has passed, and we can gather and collect all possible data sets, and perform detailed reconnaissance of the areas impacted, both remote and in person. RMS reconnaissance has already begun, with our remote sensing experts in full swing, and a team of our modelers headed to the affected region. On the ground inspections and observations will need to wait until the storm has passed, including any looping around that might be to come.
We begin by looking at the NHC track and cone of uncertainty, and define “gates” for each point along the track and the projected path. The set of candidate tracks is then any that pass through these same gates, with wind speeds within a defined range of the values reported by the NHC in each case. We assemble a big list of candidate scenarios, and begin to review each one in turn, discussing the pros and cons of inclusion in our selection for the day.
This morning’s NHC Advisory
First up is the Caribbean update. Even though Matthew has been out of the Bahamas for the best part of 24 hours, new information is available. Our Caribbean selection can now benefit from the work the RMS Hwind team is doing to generate a complete wind swath for Matthew. The preliminary swath proves hugely useful to make sure we don’t include modeled events with winds too far east in our set. As this work continues, it will inform our complete track selection for Matthew’s impact in the US as well. Remember to keep an eye on the @Hwind Twitter feed for rolling updates.
We spend some time debating the fact that our Caribbean track selection representing loss in the Bahamas contains numerous modeled events that do go on to cause a major disaster in Florida (and hence why these tracks do not represent what is happening in Florida) – the high pressure over the Carolinas that has steered Matthew along its unusual path has averted something far worse.
Our Caribbean scenarios are finalized, with a candidate set of 29 narrowed down to 13, the smallest modeled scenario at less than $1bn, and the largest just over $5bn (wind only).
We move on to discussing the ongoing situation in the U.S. An hour of healthy debate ensues, and from our candidate set of 20 modeled storms with U.S. impact, we settle on five that our hurricane experts feel are Matthew-like, each in different ways: track similarity, parameter similarity (Vmax, Rmax, pressure), windfield similarity, onshore impact, and various other dimensions.
Our five modeled storm scenarios range from $2bn to $8bn (wind only) – considerable uncertainty remains. It is however becoming clear that Florida at least has dodged the bullet that was heading its way on Thursday.
And as we always advise our clients, these are potential scenario losses, they represent a wide range consistent with the ongoing uncertainty, and they are not industry loss estimates of the storm itself. An industry loss estimate will be provided as fast as possible, but requires much more interrogation of many more data sources, as well as sifting through all the damage and reconnaissance reports.
Hwind preliminary Caribbean footprint for the portion of track from Haiti into the Southern Bahamas. Note the highest wind gust marker, on the South coast of Haiti, consistent with the reports of extreme damage now emerging.
So, with today’s event selection complete, our team shifts gears again to package up the event selections to deliver to our clients via the RMS Event Response outreach process, with all associated insights and commentary. We’re already receiving inbound requests from our clients, asking when this information will be made available – looks like lunch might have to get cold – time and (storm) tide wait for no modeler!
(end of Saturday update 1)
Friday, October 7 – update 2
As Hurricane Matthew continues up the Florida coast, we’ve been putting some questions to RMS experts:
Q: Florida’s facing wind damage and flooding from rain and sea storm surges – which is likely to be worst?
RMS Meteorolgists and hurricane risk experts Tom Sabbatelli and Jeff Waters
“The potential for significant wind impact is decreasing, as Matthew has remained further offshore than anticipated and the strongest winds remain tightly packed around its center. However, forecasts have the storm coming close the Georgia/South Carolina coast. The principle concern turns to the north for significant flood risk in the southeast U.S., including high storm surge risk from Jacksonville northward to Charleston, SC. As a large, slow moving storm, Matthew has been absorbing a lot of tropical moisture and building up a lot of rising water over its lifecycle. This increases the potential for heavy rainfall and significant build-up of water along the southeast coastline, which features greater storm surge potential than eastern Florida due to local bathymetry (contours of the sea bed). The size and extent of storm surge-driven coastal flooding could be worsened as it phases with the normal, daily high tide. Rainfall estimates in excess of one foot (30 cm) are expected along the coast of South and North Carolina, two areas where soils are already heavily saturated and river levels are high based on significant rainfall over the last few weeks.”
Q: How should insurers expect losses to be split between commercial and personal lines?
Tom Sabbatelli and Jeff Waters again:
“If Matthew ultimately turns out to be a flood-driven event, the insurance industry is more likely to be impacted by private commercial flood policies than residential flood, which is primarily covered by the National Flood Insurance Program (NFIP). Florida has the highest number of NFIP policies in-force (1.7 million), but there are only approximately 417,000 NFIP policies in-force combined for Georgia, South Carolina, and North Carolina. In residential areas where both wind and storm surge have occurred, we do expect some degree of what we call “coverage leakage,” a claim’s adjuster’s inability to distinguish whether damage was caused by wind or storm surge. This effect tends to increase wind policy losses, as the flood loss “leaks” into the wind payout.”
Q: What causes most damage – the hurricane making landfall or tracking up the coast?
Brian Owens, RMS expert in tropical cyclones
“This depends on a number of factors – if Matthew were to make landfall as a major hurricane and track across Florida you could get significant damage; making landfall would weaken the storm but the core of the strongest winds would definitely pass over land. If the storm tracks the coast and the eye remains offshore this would cause Matthew to maintain its intensity as it has continuing access to its primary source of energy – warm sea water. The critical factors in this second scenario are how close to the shore Matthew tracks, for how long, and how far the strongest winds extend out from the centre of Matthew. What makes Matthew particularly unusual is that it is forecast to track along the coast of four states (FL, GA, SC and NC) as a hurricane. This could accumulate damage along hundreds of miles of coastal property.”
Dr Mike Kozar, expert in hurricane risk at the RMS Hwind high definition hurricane mapping center in Florida, adds:
“The center of Hurricane Matthew has remained just offshore this morning. Based on measurements from the Hurricane Hunter aircraft, peak winds were estimated to be around 115mph at 1200 UTC. These peak winds, are found on the northeastern eyewall, approximately 40km northeast of the center. So right now it looks unlikely that the strongest part of Matthew’s wind field will come ashore in Florida, although by definition hurricanes are extremely dynamic phenomena. However, the western eyewall, and with it hurricane force winds, is located just offshore, and wind gusts have already exceed 50mph along Florida’s Space Coast.”
Q: Hurricane Nicole is having an effect – how – and is it strange that we’re seeing two cyclones in the same area at once?
Brian Owens, RMS expert in tropical cyclones
“While unusual, this has been seen before in the tropical Atlantic. Hurricanes have large atmospheric circulations and when hurricanes are close those circulations can move around each other, interfere with each other, or even merge.”
Q: Matthew is a relatively small hurricane in terms of its surface area – does this have implications for its strength and intensity?
Brian Owens, RMS expert in tropical cyclones
“There are no set rules here: you can have large intense storms and smaller intense storms too. The core of the strongest winds is generally in a small area around the eye wall. Matthew has been through its lifetime on the smaller end of size range, which has implications for the geographic scale of the damaging winds and rain. It was very intense and destructive as it tracked through the Caribbean, and while weaker now, we need to remember that, regardless of size, Matthew will potentially impact a lot of coastal regions of the U.S.”
Western eyewall continues to skirt Florida coastline as Hurricane Matthew pushes northward. Peak winds still near 115mph well offshore.
(end of Friday update 2)
Friday, October 7 – update 1
As Hurricane Matthew has developed we’ve been keeping you up to date all week with insights from RMS experts. As the storm moves up the Florida coast, here’s the latest:
Emily Paterson, head of RMS event response
“According to the 06:00 UTC National Hurricane Center (NHC) advisory, Matthew is currently impacting Florida as a Category 3 storm, with tropical storm force winds impacting Miami and south east Florida through last night. Matthew has started to accelerate and its closest approach is forecast for Cape Canaveral at 12:00 UTC. Although the NHC does not forecast a direct landfall at this time hurricane-force winds are expected to be felt along the East Coast.
Hurricane Matthew is forecast to continue to track extremely close to Florida and Georgia through Friday as it moves towards the north-northeast. The storm is forecast to weaken Friday night into Saturday while moving along the U.S. southeast coast, impacting portions of Georgia, South Carolina, and North Carolina.”
Ben Brookes, head of RMS capital markets team on the possible impacts
“Having strengthened to category four status on its approach to Florida, Matthew has now weakened again but there is still significant risk to communities in its path – hence the evacuations.
It’s still a highly dynamic situation – Matthew could yet take a more easterly path, and bypass the U.S. without major areas of hurricane force winds over land – yet even in this scenario, high winds, heavy rainfall, and a large storm surge are all possible and expected. A small difference in storm track, perhaps only in the tens of miles, could bring the center of the storm on land and significantly change the storm’s impact on Florida and the southeast U.S..”
Brian Owens, RMS expert in tropical meteorology commented on the weakening of Matthew:
“From radar you can see the eyewall became more disorganised as it left the Bahamas and moved towards the coast of Florida. This was consistent with the weakening of the storm back to Cat 3 overnight. The NHC has discussed that the hurricane may be going through an eye-wall replacement cycle, which typically leads first to a weakening of the storm, followed by possible further strengthening.”
Dr Paul Wilson, expert in hurricane risk added an update on the storm surge
“Should Matthew continue to track parallel to the east coast of Florida, catastrophic damage from storm surge is less likely than a similar-sized event in the Gulf of Mexico, because the bathymetry (contours of the sea bed) off the east coast of Florida is at a steep gradient, falling away quickly. However, Matthew’s size and speed, two very important factors in determining the expected amount of surge, will ultimately influence the amount of coastal flooding. It looks like there’s a possibility Matthew might be speeding up which would reduce the risk of prolonged winds causing damage along the coast.
In some areas, Florida’s east coast contains densely populated bays and rivers that may sit at greater risk to storm surge. If winds become aligned with the orientation of a bay or river over a period of hours, it can cause the water to pile up at the end of the waterway.”
(end of Friday update 1)
Thursday, October 6 – update 3
As well as monitoring the likely impacts on Florida, RMS is also analyzing the continuing impacts on the Caribbean. Dr. Paul Wilson is an expert in hurricane and storm surge risk:
“Today there’s understandably a lot of focus on how Matthew’s going to affect the U.S. But it’s still having major impact on the Bahamas.
Some commentators have been looking for historical comparisons and Hurricane Hazel in 1954 was a remarkable analogue for Matthew’s track across Haiti and Cuba. But Hazel passed through the Bahamas further to the east. A better analogue for Matthew’s current track in the Bahamas would be a storm like the 1899 San Ciriaco Hurricane which tracked further to the west.
Against today’s exposure RMS modeling would put Hazel at under US$1 billion in the Bahamas primarily from storm surge damages, while the San Ciriaco Hurricane would have been in excess of $5bn in the Bahamas. The range of losses from the pre-landfall analyses that RMS has made for Matthew encompass this range of historical loss.”
(end of Thursday update 3)
Thursday, October 6 – update 2
Dr. Mark Powell and Dr. Mike Kozar are RMS hurricane risk specialists based in Florida. Mark pioneered Hwind real-time analysis of hurricanes with observational data from instruments in the air, in the sea and on land – including aircraft reconnaissance, GPS dropsonde instruments, sea buoys and satellites. As the storm heads towards Florida, here is Mark and Mike’s latest take on Matthew, in light of the current forecast:
“Given that Matthew’s strongest winds are confined to a very small area within its inner core, a difference of track in the tens of miles would translate to a substantial change in wind impacts both along the coastline and in interior cities such as Orlando.
Currently, landfall is most likely to occur between, West Palm Beach and St. Augustine early Friday morning. Winds will likely approach and possibly exceed hurricane force across much of this stretch of coastline, with localized flooding from storm surge, and heavy rainfall. The storm will gradually weaken as it remains very close to if not over land for much of Thursday night and Friday.
Nonetheless, other parts of the state will see effects too. Although hurricane force winds may be confined to coastal areas, torrential downpours and wind gusts will likely stretch across more than half of the peninsula as the storm progresses northward. On Friday night, Matthew is expected to continue north of this area approaching Jacksonville, as it slowly starts to curve back towards the northeast, roughly following the shape of the coastline in Georgia and South Carolina. Eventually on Saturday a subtropical ridge to the north will force Matthew to turn to the east, and potentially southeast, away from the coast into a more hostile environment that will cause Matthew to weaken more rapidly.”
(end of Thursday update 2)
Thursday, October 6 – update 1
Good morning. We’ve been asking experts from across RMS for their observations as Hurricane Matthew develops.
At 1100 UTC on Thursday 6 October, this is the first of today’s updates, from the RMS event response team:
Major Hurricane Matthew is forecast to continue tracking through the Bahamas on Thursday while intensifying from a Category 3 to a Category 4 hurricane.
At this stage there’s not complete agreement between forecasts on whether there’ll be a direct landfall in Florida, but the all projections indicate that impacts in the state could be significant. Currently, the National Hurricane Center (NHC) forecasts Matthew to track up the east coast within 30 miles (48km) of the shore with a closest approach of under 5 miles (8km) from land at Cape Canaveral. Whilst, the Global Forecasting System (GFS) and European Centre for Medium-Range Weather Forecasts (ECMWF) indicate a potential landfall somewhere between Port St. Lucie and Cape Canaveral.
It’s also set to get stronger, developing from a Cat 3 to a Cat 4 storm as it tracks towards Florida. Hurricane force winds are expected to extend 45-60 miles (75-95 km) north of the eye, which could therefore affect the entire Florida coast as the system tracks alongside it. According to the NHC, there is a greater than 40% chance of hurricane force winds affecting the coast between Boca Raton and Daytona Beach and a greater than 80% chance of tropical storm winds affecting the entire east coast of Florida north of Miami.
Both the GFS and ECMWF expect Hurricane Matthew to make a southward turn early on Sunday October 9. There is some disagreement between the forecasts for Matthew’s track into next week; GFS indicates that Matthew may make a westward turn with a potential second landfall in Florida whilst the ECMWF has the storm remaining in the Atlantic before moving out eastwards by Wednesday next week.
U.S. Tropical storm warnings are now in effect for the Florida Keys and Florida Bay whilst hurricane warnings are in place for the entire east coast north of Miami. Hurricane watches are also now in effect for the entire coast of Georgia and parts of South Carolina.
(end of Thursday update 1)
Wednesday, October 5 – update 2
We’ve been asking experts from across RMS for their observations as they monitor the progress of Hurricane Matthew. This is the second update for today – please read further down this thread for the first.
At 1600 UTC on Wednesday, here’s the latest commentary:
Emily Paterson – head of RMS event response – on the current forecast:
“Matthew is expected to track through the Bahamas as a Category 4 storm through tomorrow, Thursday October 6, before tracking 45 miles (72 km) offshore parallel to the Florida coastline on Friday October 7. A Florida landfall as a Category 3 or 4 storm is possible under the current forecast, with the interaction with Tropical Storm Nicole and a mid to upper level high pushing Matthew further west. There are large amounts of insured exposure along the eastern Florida coast, which have the potential to be impacted by the storm.”
Tom Sabbatelli – RMS meteorologist and hurricane risk modeler – on the characteristics of Hurricane Matthew
“While its cloud structure may appear symmetrical, a hurricane does not feature a symmetrical wind field. In the northern hemisphere the portion of a hurricane to the right of its track typically features the strongest winds and storm surge. While still a powerful hurricane, Florida is expected to not fall within Matthew’s right hand side, as the current forecast track parallels its east coast.
If current forecasts turn out to be accurate, a movement along Florida’s east coast would make catastrophic damage from sea storm surge less likely because the east coast is ocean-facing and shelves off deeply. If it was a more gentle sloping coastal incline, like on the Gulf of Mexico, this would allow larger surges to build up. However, we are still intently watching the evolution of Matthew’s size and speed, two very important factors in determining the expected amount of surge.”
On this point, Dr Mark Powell – RMS hurricane and storm surge risk specialist – added
“The exception to this could be the densely populated bays and rivers along the East Coast. Examples would include Biscayne Bay, which extends north and south of Miami, the Indian River Lagoon system that comprises 30% of Florida’s central east coast, the Halifax River near Daytona Beach, and the St. Johns River near Jacksonville, which can be more vulnerable to storm surge especially for a slow moving storm like Matthew. If winds become aligned with the orientation of the bay/river over a period of hours, it can cause the water to pile up at the end of the bay.”
Ben Brookes – head of the capital markets team at RMS – has been continuing to assess the potential impact on catastrophe bonds and other insurance-linked securities:
“If anything, things are more uncertain today than they were yesterday – the range of forecasts seems to have widened, with everything from West Palm Beach landfall to a complete Florida bypass, or landfall in the Carolinas. There are even models predicting Matthew will make a loop in the Atlantic and further impact Florida next week.
Potential market impacts are therefore still very broad – if Matthew makes landfall in a densely populated area, or closely skirts the Florida coastline around Cape Canaveral through to Jacksonville, we could still be looking at losses that would rival anything in recent history. But that’s a big “if.” In a scenario like this, we could see the ILS market impacted, and with significant bond exposure in Florida, a major industry loss would be highly likely to also mean losses to outstanding cat bond principal.
On the other hand, it remains quite possible for Matthew to stay further offshore, or for the damaging winds to affect less populated areas. As yet we could still be looking at a low-single-digit billions industry loss event, which would mean very little impact to the ILS market.
What’s clear is that the uncertainty that’s unfolding is likely to create trading interest – the market is closely monitoring what’s going on, and in some cases actively hedging.”
Aircraft data from NOAA Hurricane Hunter and the Hurricane Hunter Association indicates that western eyewall of Hurricane Matthew has weakened from its landfall in Cuba.
(END OF WEDNESDAY UPDATE 2)
Wednesday, October 5 – update 1
Latest update from Dr Mike Kozar and Dr Mark Powell, experts in hurricane risk based in Tallahassee, Florida – RMS’ center for HWind high definition hurricane impact mapping.
There was a possibility that Hurricane Matthew might have weakened yesterday as it travelled over Hispaniola, the large island comprised of Haiti and the Dominican Republic. But Matthew’s center only skirted Haiti’s mountainous terrain and quickly returned over water, and so its strength did not diminish much. The storm continued northward through the Windward Passage during the afternoon, maintaining its intensity between 130 mph and 140 mph according to measurements from the U. S. Air Force Reserve Hurricane Hunters.
The 0000 UTC Wednesday morning HWind analysis indicated that Matthew made landfall on the eastern tip of Cuba with hurricane force winds extending about 50 miles westward. Matthew’s short time over land will limit the interaction with Cuba’s terrain so the storm is expected to regain intensity shortly after emerging back over the ocean near the southern Bahamas. The storm is expected to continue generally northward through the Bahamas on Wednesday before threatening the United States on Thursday and Friday.
In the last 24 hours, model consensus has shifted the effects of the storm westward, making impacts along the Southeast coast of the United States more likely. As Matthew approaches Florida, the storm is expected to slowly weaken in the next day or two, owing to increased vertical wind shear. Overall, the threat to Florida, Georgia, and the Carolinas will be determined by the exact track of the storm, particularly how far west it reaches as it interacts with the subtropical ridge while moving northward up the coast.
The general model consensus suggests that Matthew will slide northward very near, if not scraping along, the Florida coastline as a strong hurricane, making at least tropical storm force winds, high surf, and heavy rain likely for most of the cities along Florida’s East Coast, which has not seen a direct landfall from a hurricane since Katrina in South Florida in August 2005 (Hurricane Wilma struck the Gulf coast in later in 2005 and more recently Hermine struck the panhandle earlier this year).
Beyond potential impacts to Florida, the forecast into the weekend is still quite uncertain, as the position and strength of the subtropical ridge will determine whether or not Matthew will continue up the coast or meander off of the Southeast coast before heading out to sea.
(END OF UPDATE)
Tuesday, October 4
Major Hurricane Matthew is one of the most powerful North Atlantic hurricanes in recent history, having briefly reached Category 5 strength on Saturday October 1 and the strongest hurricane anywhere in the Atlantic since Hurricane Felix in 2007, which also tracked through the Caribbean Sea.
Below we have expert commentary on the storm from Ben Brookes, Emily Paterson, and Dr. Michael Kozar, and we will be posting further updates here on the RMS Blog as the event unfolds over the next few days.
Ben Brookes, Vice President, Capital Markets at RMS, said: “There are a number of public catastrophe bonds exposed to Caribbean windstorm, the vast majority of which only have exposure in Puerto Rico. At this time Hurricane Matthew is far enough from Puerto Rico to be unlikely to cause a significant impact. There are no publicly issued catastrophe bonds on risk solely covering Caribbean exposures. If present, Caribbean exposure typically makes up a small proportion of exposed limit alongside U.S. and Canadian exposure.
NHC hurricane watches or warnings are in effect for Jamaica, Haiti, Turks and Caicos and certain regions of Cuba and the Bahamas, all of which except Cuba are member nations of the Caribbean Catastrophe Risk Insurance Facility (CCRIF). CCRIF provides insurance coverage on a parametric modeled loss basis to member countries and sponsored a catastrophe bond in 2014 issued from the World Bank’s Global Debt Issuance Facility alongside its traditional reinsurance program.”
“Flooding and landslides are a big concern from Hurricane Matthew in the Caribbean, and are likely to be a major contributor to damage from the storm. The slow-moving nature of Matthew is allowing the storm to build up moisture, which can result in heavy rainfall as the system passes over land,” said Emily Paterson, head of event response at RMS.
While Matthew is still a Category 4 major hurricane, the wind-field is relatively small, with hurricane force winds only extending 40 miles (65 km) from the center. Matthew is making landfall along the edges of Haiti and Cuba, and therefore we expect wind damage to be relatively localized.
Storm surge from Matthew is another concern. Matthew’s strong winds can cause significant storm surge in the Caribbean. Many of the islands in Matthew’s track have multiple bays, which have the potential to amplify storm surge by not allowing the water to flow away to the side. Furthermore, as Matthew has a fairly linear track, this also amplifies the risk of high waves and storm surge.
We are keeping a close eye on Matthew’s extended 4-5day forecast, which has the storm tracking very close to the U.S. coastline off Florida and the southeastern states, before making landfall in the U.S. in the Carolina region at Category 2 strength. There’s still a fair amount of uncertainty at this lead time though.”
Dr. Michael Kozar, hurricane risk specialist at RMS, notes: “Matthew has a thermodynamic environment that could potentially support a very intense hurricane as it moves up the Gulf Stream over water with sea-surface temperatures of above 28°C.
With respect to the slow forward speed of Matthew, if a storm sits on top of its own cold wake it can weaken. However, in Matthew’s case, the sea surface temperatures across the northern Caribbean and around the Bahamas are well above 28°C. Furthermore, warm water seems to exist well below the surface, based on maps of various isotherm depths and ocean heat content. Given how shallow water is near the Caribbean Islands, upward mixing of cold water may not be a huge limiting factor on the storm’s intensity, until it pulls further north into colder waters or northeast off the continental shelf.
A more significant factor for a cap in Matthew’s intensity, besides the amount of time it spends near/over land such as Hispaniola and Cuba, is wind shear and dry air. Forecasting the impact of wind shear on Matthew has been quite tricky thus far as Matthew has been located just south of an area of moderate to high shear for quite some time. If the shear north of the system holds its ground, Matthew very likely will weaken.
Furthermore, there also appears to be some dry air in the mid-levels that could suppress intensity as Matthew pulls poleward away from the Caribbean and into the Western Atlantic. All of this does point to weakening as the storm moves northward, but keep in mind the model consensus has been calling for some degree of weakening for a day or two. Yet Matthew’s intensity largely just oscillated up and down over the course of the weekend and into today.
Regardless, the inner core of Matthew is quite small, so the large scale impacts from wind may be secondary to the impacts from rainfall, save for within about 50 miles of the center.”
Based on RMS reconnaissance trips to the area in 2015 as part of the research conducted to update the RMS North Atlantic Hurricane Model in 2017, the RMS view of vulnerabilities by island is below:
Haiti: In Haiti the main concern is rainfall, since with steep terrain much of the country is exposed to flooding and landslides which could be the biggest source of issues in the most populated areas if they aren’t hit by high winds. And certainly the most exposed areas along the southern coast look like they will be hit hard. It is expected that much of the local building stock has been built in recent years, following the 2010 earthquake that devastated the country. The Haitian government instituted a new building code in 2012, in direct response to the earthquake, but it is unclear to what extent this new building code is being enforced. RMS research does, however, indicate that buildings in Haiti are expected to perform worse than most Caribbean islands, although this varies by individual construction type. Insurance penetration in Haiti is expected to be low.
Cuba: While market knowledge of vulnerability in Cuba is low, research into the area by RMS shows us that, despite being older on average, the building stock performs well overall due to the high presence of concrete construction. Insurance penetration is also expected to be low.
Jamaica: Building codes in Jamaica have not had a major revision since the first building code was enacted in 1908. However, RMS reconnaissance and research shows that single-family homes are built by local engineers to high standards; reinforced concrete construction is very prevalent across the island. In 2012, Jamaican engineers adopted many practices outlined in recent International Building Code (IBC) standards, which are likely to be enacted in newer commercial construction.
Bahamas: Insurance Penetration in the Bahamas is understood to be higher than other Caribbean islands, although lower than hurricane-exposed regions of the U.S. However, RMS analysis suggests that the Bahamas, with a long history of building codes, exhibit better construction quality than most of the Caribbean. The predominant construction material is reinforced concrete, although amongst the Family Islands there is a higher proportion of wood construction, leaving these islands potentially more vulnerable to wind damage. Despite being well attached to the walls, roofs in the Bahamas often feature asphalt shingles, which can increase the vulnerability of the roof and the entire structure. RMS reconnaissance shows that insured property accounts for less than 40 percent of all homes; one estimate places single-family dwelling insurance penetration at near 20 percent. Commercial exposures are more likely to be insured than residential exposures.
Hurricane Matthew has tracked most of the way up the Florida coastline as a Category 3 major hurricane. Matthew tracked further offshore than previously forecast, placing the worst of the storm’s winds and storm surge offshore of Florida. While there have been hurricane force winds onshore and some damage from Matthew along portions of Florida’s east coast, thankfully the levels of damage in Florida that we are seeing are lower and less widespread than we expected just 24 hours ago.
As Matthew continues to track along the coastline, our focus shifts north towards Georgia and South Carolina, with a potential landfall near Charleston, South Carolina as a Category 2 hurricane. Even if landfall does not occur, there is significant flood risk in the southeast U.S., including high storm surge risk from Jacksonville northward to Charleston, SC. As a large, slow moving storm, Matthew has been absorbing a lot of tropical moisture and building up a lot of rising water over its lifecycle. This increases the potential for heavy rainfall and significant build-up of water along the southeast coastline, which features greater storm surge potential than eastern Florida due to local bathymetry. The magnitude and extent of storm surge-driven coastal flooding, exacerbated by the occurrence of astronomical high tide cycles, is expected to rival that of Hurricane Hugo (1989).
Bands of heavy rain are extending as much as 500 miles north-northeast of Matthew into Georgia and the Carolinas, suggesting that the storm could cause excessive rainfall and precipitation-induced flooding over the next few days. Rainfall estimates in excess of one foot (30 cm) are expected along the coast of South and North Carolina, two areas where soils are already heavily saturated and river levels are high based on significant rainfall over the last few weeks. According to the National Weather Service in Charleston, South Carolina, coastal and inland flooding impacts could be comparable or worse than the October 2015 flood event.
A shift in Matthew’s movement could have a large influence on the impacts both along the coast and further inland.
Over the past several days, Matthew’s forecast has changed significantly.
To assist our clients in understanding the full range of potential outcomes from Matthew, we continue to select stochastic events from our North Atlantic Hurricane model to represent the range of potential scenarios as the situation evolves. These have been provided to our clients on a daily basis, along with information regarding the modeled losses of these scenarios from our Industry Loss Curves. As the forecasts have evolved, so have the events we selected to represent the range of scenarios. As would be expected with a shift in forecast away from the Florida coast over the past 24 hours, today’s event selection saw a significant reduction in losses.
As a measure of the change in just 24 hours, the average industry loss of the 15 selected events yesterday was $20bn, with losses from the individual scenarios ranging from $7bn to $54bn. Today, the average loss of the 10 selected events was just $6bn, with losses from the individual scenarios ranging from less than $1bn to $19bn. This illustrates that the range of potential outcomes has shifted significantly, but it still remains wide – and continues to evolve.
But these are just modeled scenarios, chosen based on track parameters that are already out of date.
Just as the average loss from the range of scenarios doesn’t mean much, individual scenario losses shouldn’t be viewed as loss estimates for Matthew: they are chosen to help our clients make sense of what’s happening. Tomorrow these will change yet again as the official forecasts are updated and our understanding of the storm evolves.
Efforts towards determining RMS’ official loss estimate for a hurricane begin once the storm has fully passed.
This is when our modelers can begin producing reconstructions of the hurricane’s windfield and storm surge extent. In significant hurricane events, such as Matthew, RMS modelers and experts are also deployed to survey damage on the ground. Matthew’s ultimate behavior, including a possible recurvature towards The Bahamas and Florida next week, could potentially delay these efforts.
In the meantime, as Matthew is still evolving, so is our response.
The RMS Event Response team will continue to provide daily event reports with updates to the stochastic event selections daily through the weekend. The RMS Knowledge Center will also be on hand through the weekend should any questions arise.