Author Archives: Jeff Waters

About Jeff Waters

Meteorologist and Manager, Model Product Strategy, RMS
Jeff Waters is a meteorologist who specializes in tropical meteorology, climatology, and general atmospheric science. At RMS, Jeff is responsible for guiding the insurance market’s understanding and usage of RMS models including the North American hurricane, severe convective storm, earthquake, winter storm, and terrorism models. In his role he assists the development of RMS model release communications and strategies, and regularly interacts with rating agencies and regulators around RMS model releases, updates, and general model best practices. Jeff is a member of the American Meteorological Society, the International Society of Catastrophe Managers, and the U.S. Reinsurance Under 40s Group, and has co-authored articles for the Journal of Climate. Jeff holds a BS in geography and meteorology from Ohio University and an MS in meteorology from Penn State University. His academic achievements have been recognized by the National Oceanic and Atmospheric Administration (NOAA) and the American Meteorological Society.

4 Facts About California’s “Hellastorm”

California is bracing for a major storm this week. Many schools are closed and residents are hunkering down in preparation for potential flooding. Not to be outdone by the East Coast, which has come up with monikers like “snowmageddon” and “snowpocalypse” for their recent storms, some are referring to it as the “hellastorm.”

Source: twitter.com/AllyNgSF

So, what’s the deal with the so-called “storm of the decade?”

It’s getting rainy and windy on the West Coast.

Estimates this morning are predicting 1 to 5 inches of rain from Northern California up to Washington, 1 to 2 feet of snow in the Sierra Nevada mountains, and wind gusts over 50 miles per hour in the interior regions.

It will happen again.

Storms like these are not uncommon, occurring once every 5 to 10 years. So we could experience another one before the end of the decade.

The drought is partially to blame.

While drought conditions are not a necessity for these types of events, they can increase the impact of flooding because the ground cannot absorb water fast enough. The same can occur when the sustained heavy rain falls on ground is already saturated.

The current rain came all the way from Hawaii.

Storms like this are dependent on many variables. In this case, the excessive rain and snowfall is being driven by the position of the jet stream and what’s known as the Pineapple Express, an atmospheric plume of tropical moisture that flows from the sub-tropics near Hawaii to the U.S. West Coast. It generally occurs during El Nino years, but in this case, forecast El Nino conditions did not fully develop. In other words, it’s a weak one.

UPDATE: Northern California has gotten more than 8 inches of precipitation so far. Sustained winds were forecast to be up to hurricane force (70 to 80 mph) in the local mountains and up to 100 mph in the higher elevations across the Sierra summit. A wind gust to 147 mph was recorded at high altitude peak near Lake Tahoe, that had surfers catching 7-foot waves on the lake!

4 Things You Didn’t Know about Why it’s So Darn Cold!

The U.S. is currently experiencing a bout of cold weather in several regions, raising the question: are we in for another polar vortex winter like the bone-chiller we had last year? And if so, why? Here are four things you might not know about the current extreme cold weather streak in the U.S.

The current cold weather isn’t quite another polar vortex in the U.S. – yet. 

The polar vortex is a region of Arctic air that rotates around the North Pole in the Northern Hemisphere, trapping and containing the frigid air in its circulation. Every now and then, parts of the rotating pocket of cold air break off into smaller pockets that mobilize southward into regions like North America, bringing with them below-normal temperatures and stormy conditions.

Figure 1: General image of the Polar Vortex. Source: Accuweather.

As of now, the U.S. is not experiencing full-blown polar vortex effects; only part of the big Arctic air pocket has been displaced into the U.S., so it is more accurate to say that the country is experiencing an outbreak of Arctic air. Last year, most of the U.S. experienced exceptionally cold and snowy conditions, particularly east of the Rockies, as a result of the polar vortex. Early seasonal outlooks for this winter have indicated that this type of severe weather pattern is unlikely to repeat, though one cannot rule out more Arctic outbreaks like this one.

You can blame Super Typhoon Nuri in Japan.

Many of the world’s largep-scale climate systems and atmospheric patterns are interconnected. You may not know it, but Super Typhoon Nuri, which impacted Japan earlier this month as one of 2014’s strongest tropical cyclones, has played a key role influencing this recent cold air outbreak. Cold air from the polar vortex is separated from warm air by what’s called the polar jet stream; depending on atmospheric conditions, this jet stream can look flat or wavy. Big storms, like Nuri, can alter the jet stream’s shape, pushing parts further north (creating a “ridge”) or south (creating a “trough”) than normal.

Figure 2: Example of a jet stream’s ridges and troughs. Source: Skeptical Science

In Nuri’s case, remnants of the storm pushed part of the polar jet stream north over Alaska, creating a strong ridge. This in turn caused a deep trough to develop over much of the central U.S., making way for Arctic air associated with the polar vortex to flow into the lower 48. It is common for storms to affect the jet stream’s shape, but because Nuri was so intense, it influenced the jet stream enough to trigger a prolonged period of unseasonably chilly weather from North Dakota to New York.

Climate change could have something to do with it. 

Our climate is changing, but there are differing views on how climate change affects the polar vortex. Some posit that a warming climate may lead to more frequent cold air outbreaks due to increased sea ice melting. This would allow more energy to move into the atmosphere and weaken the jet streams, thereby increasing the likelihood of cold Arctic air escaping southward into regions like North America and Europe.

©iStock.com/SeppFriedhuber

Other scientists argue that cold air outbreaks are common and part of the natural variation of the climate. They also suggest that it is extremely hard to link a massive, long-term shift in climate (for example, global warming) to individual weather events. It’s also worth noting that the U.S. takes up less than 3 percent of the Earth’s surface, so even though this region is experiencing cold air outbreaks, there are other parts of the world experiencing record heat at the same time.

Other parts of the country could be in for abnormal weather due to El Niño.

Also affecting this winter’s temperatures is the weak central El Niño being forecast; this series of climatic changes happens when the tropical Pacific Ocean, particularly the central and eastern regions, becomes warmer than average. As the ocean gets warmer with respect to its average temperature, the stronger the El Niño signal. El Niño often results in changes to precipitation and temperature patterns throughout the world, including North America, and especially in the winter.

The most common impact is wetter-than-average conditions along the Gulf Coast, warmer-than-average conditions in the Northern Rockies and Pacific Northwest, drier-than-average conditions in the Ohio Valley, and, to a lesser extent, wetter-than-average conditions in California and the southwestern U.S. The weak El Niño forecast means that these impacts are possible, but not likely to be extreme.

Canada earthquake risk 85 years after the Grand Banks earthquake and tsunami

November 18 marked the 85th anniversary of one of the largest and deadliest earthquakes in Canadian history, one that reiterates the importance of managing all drivers of earthquake risk effectively in the region.

The 1929 Grand Banks earthquake and tsunami was a magnitude 7.2 event that occurred just after 5:00 p.m. NST approximately 155 miles south of Newfoundland and was felt as a far away as New York City and Montreal. The earthquake caused limited damage on land and water, including minor landslides, but triggered a significant tsunami that was recorded as far south as South Carolina and as far east as Portugal.

Sea levels near the Newfoundland coast rose between 6 and 21 feet, with higher amounts recorded locally through narrow bays and inlets, and the tsunami claimed 28 lives. Had this event occurred near a more populated region, such British Columbia or Québec, the impacts could have been much worse.

Figure 1: A home in Newfoundland gets dragged out of a nearby cove following the 1929 Grand Banks earthquake and tsunami. Source: Natural Resources Canada

An event like this shows just how complex the Canadian earthquake risk landscape can be and how important it is to keep that view of risk as up-to-date and accurate as possible. On average, Canada experiences approximately 4,000 earthquakes each year. Most are small, but some can be large, particularly along the west coast near Vancouver and Victoria. There, in what is known as the Cascadia Subduction Zone, the Juan de Fuca plate is sliding underneath North America, causing subduction earthquakes, which tend to be less frequent but more severe than other Canadian seismic sources.

RMS has been modeling Canadian earthquake risk since 1991, with the last model update in 2009. The model inherently or explicitly includes the impacts of nearly all drivers of earthquake damage in that part of the world, from ground shaking, landslides, and liquefaction to fire following.

In building, updating, and validating the model over the years, RMS has collaborated with leading Canadian researchers and engineers, including representatives from what is now known as Natural Resources Canada (NRCan). RMS also maintains strong relationships with key insurance organizations and regulatory bodies, such as the Office of Superintendent of Financial Institutions and the Insurance Bureau of Canada, to play a key role in influencing guidelines and practices throughout the Canadian earthquake market.

The next update to the RMS Canada Earthquake Model is targeted for 2016 as part of a larger RMS North America Earthquake Models update. Among other enhancements, the model will incorporate the latest seismic hazard data (2015), internal research by the RMS seismic hazard development team, and introduce a probabilistic earthquake-induced tsunami model that will include losses from inundation along impacted coastlines.

Together, these updates will reflect the latest view of earthquake hazard in Canada, enabling the market to price and underwrite policies more accurately, and manage earthquake portfolio aggregations more effectively.

New Storms, New Insights: Two Years After Hurricane Sandy

When people think about the power of hurricanes, they imagine strong winds and flying debris. Wind damage will always result from hurricanes, but Hurricane Sandy highlighted the growing threat of storm surge as sea levels rise.

While Sandy’s hurricane-force winds were not unusual, the storm delivered an unprecedented storm surge to parts of the Mid-Atlantic and Northeast U.S. In total, Sandy caused insured losses of nearly $20 billion in the U.S., 65 percent of which resulted from surge-driven coastal flooding.

Considering the hazard and severity of the event, we used Sandy as the first real opportunity to validate our hydrodynamic storm surge model, which we released in 2011 and embedded in the RMS U.S. Hurricane Model. We verified the model against more than 300 independent wind and flood observations, the Federal Emergency Management Agency’s (FEMA) 100-year flood zones, and the FEMA best surge inundation footprint for New York City. The model captured the extent and severity of Sandy’s coastal flooding exceptionally well.

We also conducted extensive analysis of claims data from Sandy, which involved reviewing nearly $3 billion in location-level claims and exposure data across seven lines of business, provided by several companies. The purpose of the study was to deepen our understanding of the impacts of flooding on coastal exposures, particularly for commercial and industrial structures.

What struck us was how vulnerable buildings are to below-ground flooding. In many cases, damage to ground- and basement-level property and contents contributed a much higher proportion of the overall losses than expected, particularly for commercial structures in New York’s central business districts.

This insight has prompted us to improve the flexibility of how losses are modeled for contents and business interruption, specifically for basements. Early next year, we will release an update to our flagship North Atlantic Hurricane Models to provide the most-up-to-date view of hurricane risk with new vulnerability modeling capabilities based on insights gained from Sandy.

The model update includes new location-specific content triggers to enable users to make business interruption loss projections dependent on either contents or building damage, rather than on building damage alone. The model also allows users to assess the impact of multiple basement levels in a building, as well as the total value of contents stored within.

The claims data analysis also highlighted the importance of using high-resolution data to model high-gradient perils, such as coastal flooding. Flood losses are extremely sensitive to the locations of coastal exposures, as well as the surrounding topographical and bathymetrical features. Using high quality data with location-level specificity across a variety of building characteristics, as well as a high-resolution storm surge model that can accurately capture the flow of water around complex coastlines and local terrain, minimizes uncertainty.

At this time, RMS remains the only catastrophe modeling firm to integrate a hydrodynamic, time-stepping storm surge model into its hurricane models to represent the complex interactions of wind and water throughout a hurricane’s life-cycle, and we continue to implement lessons learned from new storms.

2014 Atlantic Hurricane Season Update: Not Quite 2004

The 2014 Atlantic Hurricane Season is already half over, and with only five named storms in the books and El Niño conditions likely by late fall, all signs are pointing to a below-average season.

Over the last six weeks, organizations like Colorado State University (CSU) and the National Oceanic and Atmospheric Administration (NOAA) updated their seasonal outlooks with similar or slightly reduced numbers, attributing them to a variety of oceanic and atmospheric conditions acting to suppress activity, including cooler than normal sea surface temperatures, higher than normal sea level pressures, and stronger than normal wind shear.

Interestingly, the suppressed activity is not being attributed nearly as much to El Niño conditions as originally thought. Despite high likelihoods that the equatorial Pacific would warm to El Niño levels by late summer, observed El Niño Southern Oscillation (ENSO) conditions were neutral during the July and August period, according to the International Research Institute for Climate and Society.

Such observations have certainly impacted ENSO forecasts for the remainder of 2014 into 2015. As of September 4, the likelihood for El Niño conditions to form during the period from September to November dropped to 55% from a convincing 74% probability back in May. Despite this material reduction, most of the ENSO prediction models still forecast the onset of El Niño by early Fall, peaking during Northern Hemisphere winter 2014-2015 and lasting into the first few months of 2015.

Barring any late season surge in activity, this year will be a far cry from the busier seasons of the past, most notably the 2004 season. Like this year, 2004 was also impacted by weak, neutral El Niño conditions. However, the 2004 season was impacted by a rare type of storm known as Modoki El Niño in which unfavorable hurricane conditions are produced in the Pacific instead of the Atlantic Ocean, resulting in above average activity in the Atlantic.

The most notable U.S. hurricanes during the 2004 season were Hurricanes Charley, Frances, Ivan, and Jeanne. These four events damaged an estimated 2 million properties in Florida – approximately one in five houses – and caused more than $20 billion in insured losses throughout the U.S.

The strongest system to hit land that season was Hurricane Charley. The storm made landfall on the southwest coast of Florida on August 13 as a Category 4 hurricane, causing nearly $15 billion in economic damages – one of the most destructive hurricanes in U.S. history.

Just over three weeks later, Hurricane Frances, a large, slow-moving, but less-intense system made landfall on the east coast of Florida as a Category 2 storm with peak winds of 105 mph.

In early September, Hurricane Ivan developed just south of where Frances formed, intensifying quickly. Moving through warm ocean waters, the storm reached Category 5 strength three separate times before making landfall as a Category 3 hurricane along the Mississippi/Alabama border.

When Hurricane Jeanne made landfall in Stuart, Florida on September 26, it marked the second time in history that one state was impacted by four hurricanes in one season.

At this point 10 years ago, nine named storms had already formed in the basin, with six reaching hurricane status. In total, 2004 saw 15 named storms, nine of which became hurricanes, including 6 that reached major hurricane status (Category 3+).

While this hurricane season shares some common characteristics with the 2004 season, so far, 2014 has been relatively quiet while 2004 was the second costliest Atlantic hurricane season in history.

2014 Atlantic Hurricane Season Outlook: Are the Tides Beginning to Turn?

The 2014 Atlantic Hurricane Season officially kicked off this week (June 1), running through November 30. Coming off a hurricane season with the lowest number of hurricanes in the Atlantic Basin since 1983, will 2014 follow suit as a less active season? If so, is the Atlantic Basin officially signaling a shift out of an active phase of hurricane activity? Or will we revert back to the above-average hurricane numbers and intensities we’ve grown accustomed to over most of the last 20 years? And regardless of the season’s severity, what should be done to prepare?

Forecasting the 2014 Hurricane Season

Most forecasts to date, including those of Colorado State University and the National Oceanic and Atmospheric Administration (NOAA), are calling for an average to below-average season in terms of the number of named storms (8–13), hurricanes (3–6), and major hurricanes (0–3). The same holds true for the overall intensity forecasts, where projected seasonal values of Accumulated Cyclone Energy (ACE) range from just 55 to 84, compared to the average overall seasonal ACE of 101.8.

So what’s driving this outlook? Most forecasting organizations are attributing it to two major atmospheric drivers that have been known to suppress hurricane activity: the strong likelihood of an El Niño event developing this summer into the peak part of the season from July through October, and below-average sea surface temperatures in the Atlantic Basin’s Main Development Region (MDR).

Model forecasts for El Niño/La Niña conditions in 2014. El Niño and La Niña conditions occur when sea surface temperatures in the equatorial central Pacific are 0.5°C warmer than average and 0.5°C cooler than average, respectively.

Model forecasts for El Niño/La Niña conditions in 2014. El Niño and La Niña conditions occur when sea surface temperatures in the equatorial central Pacific are 0.5°C warmer than average and 0.5°C cooler than average, respectively.

El Niño conditions create stronger-than-normal upper-level winds, which inhibit storms from forming and maintaining a favorable structure for intensification. Similarly, below-average ocean temperatures in the MDR essentially reduce the energy available to fuel storms, making it difficult for them to develop and intensify.

However, low activity does not always translate into a decrease in landfalling hurricanes. Also, all it takes is one landfalling event to cause catastrophic losses. For example, 1992 was a strong El Niño year, yet Hurricane Andrew made landfall in Florida as a Category 5 storm, eventually becoming the fourth most intense U.S. landfalling hurricane recorded, and the fourth costliest U.S. Atlantic hurricane. Of course, while a landfalling storm like Andrew may have occurred during the last significant El Niño year, there’s no guarantee it will happen this season. The U.S. has not experienced a major landfalling hurricane since Hurricane Wilma in August of 2005. This eight-year drought is the longest in recorded U.S. history.

Preparing for Hurricane Season

Whether or not the 2014 Atlantic hurricane season is active, it is imperative to monitor and prepare for impending storms effectively to help reduce the effects of a hurricane disaster.

The NOAA National Hurricane Center provides several tips and educational guides for improving hurricane awareness, including forecasting tools that assess the potential impacts of landfalling hurricanes. This year, NOAA also offers an experimental mapping tool, as well as other new tools, to help communities understand their potential storm surge flood threat.

The RMS Event Response team provides real-time updates for all Atlantic hurricanes, among other global hazards, 24 hours a day, seven days a week. Similarly, when it comes to preparation, along with the essentials, such as bottled water, canned foods, and battery-powered flashlights, consider purchasing these ten items.

Are you ready for the 2014 Atlantic Hurricane season?

Severe Thunderstorm Risk: What You Don’t Know Can Hurt You

Are you using experience based rating to underwrite severe thunderstorm risk?

Many use this approach in North America, but if you do, you could be missing out on the full loss picture for this complex peril. Though tornado and hail are responsible for a major part of the annual insured loss, straight-line winds and lightning can also contribute to a material portion.Annual Insured U.S. Thunderstorm Losses by Sub-Peril

More importantly, recent trends in industry claims practices, event severity, and exposure concentration have indicated that the risk landscape is changing, suggesting that past hazard and loss patterns may not be reflective of those in the future.

Let’s take a close look at these trends.

From a Claims Perspective

Claims have been increasingly inflated and more severe in recent years, particularly in high-risk areas. RMS analysis of over $5 billion in new claims data has shown that the average size of a residential claim has increased over 9% per year from 1998 to 2012. Commercial claims have also increased around 9% per annum, while automobile claims have increased by 2%. These increases may not be captured solely by analyzing past hazard and loss patterns, hindering underwriters’ efforts to develop effective pricing practices.

From a Hazard Perspective

Major severe thunderstorm events have recently caused untold damage and loss, well beyond what was estimated using historical records. Between 2008 and 2013, the U.S. experienced over $80 billion in insured losses from thunderstorm related hazards, and two of these events each generated more than $7 billion in insured losses.

Similarly, events such as the 2010 Phoenix, AZ hailstorm, the 2011 Tuscaloosa, AL outbreak, and the 2013 Moore, OK tornado are redefining the way the industry sees tail risk. Such extreme events and their corresponding losses demonstrate the shortcomings inherent to using historical experience as the sole foundation for a view of thunderstorm risk.

From an Exposure Perspective

More people are living in high-risk regions like the Great Plains, the Midwest, and the Southeast, increasing the amount of insured exposure at risk. From 2007 to 2012, high-risk states like Oklahoma, Nebraska, and Kansas exhibited some of the largest increases in direct premiums written. With increasing exposure comes an increased likelihood of impact from severe weather, especially in high risk areas, making it imperative to understand the risk holistically, not just in large population centers. Relying on experience based rating alone will make it difficult to estimate losses in rural or newly developed areas, as such areas generate limited historical records.

Do these trends have a material impact on the North American catastrophe risk landscape? Absolutely; the impact is clear if we look at the annual loss numbers.

Annual Losses

In the U.S., average annual losses from severe thunderstorms are second only to hurricanes, causing over $10 billion in insured losses each year since 2003. In fact, losses driven by tornado, hail, and straight-line wind collectively contributed to more than one-third of U.S. annual insured losses between 1993 and 2012.

Where Can We Go from Here?

Historical experience, while important, may not be sufficient for fully understanding severe thunderstorm risk. Relying solely on this data could lead to poor underwriting practices, misinformed pricing decisions, and ineffective portfolio management. For a more complete picture, it is necessary to add a probabilistic element to the historical analysis, so you can estimate thunderstorm risk anywhere in the country (not just population centers), and differentiate the risk accurately across regions, lines of business, and risk characteristics.

What has been your experience with estimating severe thunderstorm risk?

2013 Atlantic Hurricane Season: Much Ado About Very Little

Despite near unanimous forecasts for another above average season across nearly all major forecasting organizations, the 2013 Atlantic Hurricane season was the least active in the last 30 years.

Did you know?

  • Of the 13 named storms that formed in 2013, only two have reached hurricane strength (Humberto and Ingrid), and none became major hurricanes (Category 3+). In comparison, on average (1950-2012), the Atlantic Basin produces 11-12 named storms during a season, six-seven of which go on to become hurricanes, including two-three that reach major hurricane status.
  • The last time a season produced this few hurricanes was 1982.
  • It is also the first season since 1994 not to have produced a major hurricane.
  • 2013 was the first season in 11 years without a recorded hurricane by the end of August, and only the second season since 1944 where a hurricane had not formed by the climatological peak of hurricane season (September 10).

2013 Atlantic Storm Tracks and Intensities. Source: National Hurricane Center Preliminary Best Track Data

From an intensity perspective, the statistics are even more surprising. Hurricane forecasters measure the overall damage potential of individual tropical cyclones and tropical cyclone seasons using a metric called Accumulated Cyclone Energy, or ACE. This hurricane season’s ACE total is just over 30, which is only 30% of the long-term ACE average. Since 1950, only four other Atlantic hurricane seasons have yielded lower ACE totals: 1983, 1982, 1977, and 1972.

But why was the season so inactive?

With much of the scientific community still debating this question, a consensus has yet to be reached. Complicating matters even further is the fact that the large-scale atmospheric signals, such as the absence of El-Niño conditions and warmer-than-average sea-surface temperatures (SSTs) across most of the tropical Atlantic, indicated an average to above average season. Nevertheless, we can get a first glimpse at the most likely suppression factors.

  • Drier-than-normal air settling into the eastern Atlantic in August-September, likely a result of dry Saharan air pushing sand and dust into the atmosphere off the coast of Africa. These conditions made it extremely difficult for tropical waves moving off the West African coast to develop and intensify.
  • Atmospheric instability during the season’s peak months was reduced, making conditions less conducive for thunderstorm development, a key driver of hurricane growth and intensification
  • Intra-seasonal variability of the Atlantic Multi-Decadal Oscillation (AMO) /Thermohaline Circulation (THC), large-scale patterns in the Atlantic Ocean that are driven by fluctuations in SST. Both weakened abruptly during spring and early summer as a result of cooler-than-normal SSTs across most of the Atlantic, which may have had a negative downstream impact on hurricane formation and development during the rest of the season.

So what does this season’s inactivity mean?

  • Is global warming starting to impact the atmospheric conditions that drive the Atlantic hurricane season?
  • Is the Atlantic Ocean finally starting to show signs of shifting from an active phase of the AMO to an inactive phase?
  • Or is this season just an outlier in the longer period of above normal hurricane activity?

The jury is still out at this point, but it’s safe to say that confidence levels are low, especially if conclusions are being drawn from this season alone.

When analyzing the physical drivers of the climate, particularly for hurricane activity, it’s important not to discern long-term trends from short-term signals due to the high degree of variability associated with them. Rather, it benefits scientists and organizations to limit random, naturally-occurring variability by studying robust datasets or conducting experiments that encompass a long period of time.

For instance, the 2013 RMS Medium-Term Rates (MTR) forecast, which was released earlier this year as part of the Version 13.0 North Atlantic Hurricane Model suite, incorporates updates informed by an original study that involved simulating over 20 million years of hurricane activity to better understand the likelihood of hurricane landfalls along the U.S. coastline. The high number of simulations helped establish a higher degree of confidence in results, which has led to an increase in market agreement of the new MTR outlook.

Although the 2013 Atlantic hurricane season was a far quieter than previous years, it does provide the scientific community with plenty to consider as we look ahead to next season, which begins in less than six months.

The Next Sandy

As we have seen with recent events such as Hurricane Katrina, Hurricane Ike, and most recently Superstorm Sandy, coastal flood damage can be disproportionately large compared to wind damage.

See the recent RMS infographic on hurricanes, which highlights the risk of storm surge.

Following the flooding in Manhattan and along the New Jersey shores, Sandy highlighted the need for comprehensive, high-resolution coastal flood modeling solutions. Sandy also provided deeper insights into flood coverage terms and assumptions across various lines of business throughout the insurance industry.

With the anniversary of Superstorm Sandy (October 29) approaching, RMS identified which coastal cities may be hit with a major coastal flood event.

Closed subway station in Lower Manhattan, NY, after Hurricane Sandy hit in 2012

Using RiskLink 13.0, the latest version of our North Atlantic Hurricane model suite, RMS calculated the 100-year return period (RP) surge loss contribution (%) for 12 coastal central business districts, which ranged from Galveston to New York City.

Baltimore and Biloxi are at highest risk, driven by 100-year RP surge contributions of 61% and 51%, respectively, across all lines of business.

Believe it or not, cities like Miami and the Outer Banks in North Carolina exhibited some of the lowest risk against a major surge event, with 100-year RP contributions of 5% each.

Consistent across all high-risk cities:

  • Located in fairly low-lying areas at or below sea level
  • Close to shallow-sloping sea beds

These characteristics, among others like wind intensity and angle of landfall, effectively allow for surge to gradually build throughout an approaching storm and impact nearby coastal regions with little or no resistance.

Storm surge damage

Storm surge damage to a residential structure in Toms River, NJ, as a result of Sandy

In RiskLink 13.0, the RMS view of coastal flood risk remains up-to-date. With the core hazard modeling methodology in place since 2011, RMS has integrated the latest science, data, and industry development into the high-resolution (as high as 180 meters along coastlines and within regions of high exposure densities), hydrodynamic storm surge model from DHI known as MIKE 21.

The inclusion of these updates effectively reduces the uncertainty associated with surge hazard and loss, and ensures that the RMS coastal flood model continues to be the only credible model for quantifying surge risk accurately.

The market has taken notice. In July 2013, RMS was selected by First Mutual Transportation Authority to model the risk for the first ever storm surge catastrophe bond.

With these advancements and over 30,000 stochastic events that impact the U.S. comes a deeper insight into when and where the next major coastal flood event could occur. For instance, Superstorm Sandy surge losses contributed to 65% of total insured losses.

In RiskLink 13.0, there are over 3,000 stochastic events that do the same, which translates to an annual likelihood of about 10% across all U.S. hurricane states, based on long-term hurricane frequencies. This annual likelihood nearly triples in the Northeast (29%) and doubles in the Gulf (17%), the two regions at highest risk of experiencing the next Sandy-like event.

Similarly, given that a hurricane impacts the U.S., there is a 30% annual chance that the full insured surge loss will exceed $1 billion USD, and nearly a 14% chance that the same losses exceed $5 billion USD.

Regardless of when or where the next major surge event occurs the industry needs to have the right tools available in order to model the magnitude and severity of catastrophic storm surge accurately. For instance, coastal flood models such as MIKE 21 simulate surge characteristics throughout the lifetime of the event, not just at landfall, because it is well known that hurricanes with similar landfalling characteristics do not always produce the same surge risk.

Equally as important is the need for coastal flood models like MIKE 21 to be able to capture the localized nature of key geographical and geological features such as topography, land use, land cover, and bathymetry.

As the industry continues to gain a better understanding of their coastal flood risk landscape, especially on the local scale, RMS will continue to help by incorporating the latest available data and research into our model, investigating the underlying uncertainties and modeling challenges, and investing in future modeling capabilities on RMS(one).

The 2013 Atlantic Hurricane Season: Historically Quiet or Just Getting Started?

It’s no secret. Despite consistent forecasts of another above average season and an uptick in activity over the last few days, the 2013 Atlantic Hurricane season got off to a historically quiet start. Of the nine named storms that have formed thus far, only two have reached hurricane strength (Humberto on September 11 and Ingrid on September 15). It is the first season in 11 years without a recorded hurricane by the end of August, and only the second season since 1944 where a hurricane had not formed by the climatological peak of hurricane season (September 10).

Number of tropical cyclones that form per 100 years in the Atlantic Basin

Number of tropical cyclones that form per 100 years in the Atlantic Basin

Part of the reason behind the slow start is the large amount of dry Saharan air pushing sand and dust into the atmosphere off of the west coast of Africa, effectively stabilizing the atmosphere and disrupting tropical waves from developing off the African coast. Also, strong wind-shear in the upper atmosphere and cooler-than average sea-surface temperatures (SSTs) in the eastern Atlantic have combined to suppress tropical cyclone development and intensification even further.

Some scientists are suggesting that this is the beginning of a bigger trend in hurricane activity given the changing climate, where warmer atmospheric conditions may act to reduce the likelihood of hurricane landfalls along the Atlantic Coast due to stronger atmospheric winds blowing west to east during hurricane season, effectively pushing storms away from the U.S.

Such findings are consistent with RMS’ new Medium-Term Rates (MTR) forecast, which was released earlier this year as part of the Version 13.0 North Atlantic Hurricane Model suite. Informed by an original study that involved simulating over 20 million years of hurricane activity under various SST regimes, we found that the proportion of land falling hurricanes decreases as SSTs increase.

Despite the relatively calm beginning, there is no indication that the second half of the season would resemble the first half.

As a comparison, the 1988 season didn’t produce a storm of hurricane strength until September 2, but eventually went on to produce Hurricane Gilbert, a Category 5 event in Mexico and the Caribbean that caused more than $7 billion USD in economic damage as the most powerful Atlantic hurricane on record until Hurricane Wilma in 2005.

Similarly, the first hurricane of the 2001 season, Hurricane Erin, formed on September 9, yet that season ended with 15 named storms including 9 hurricanes, 4 of which reached major hurricane status.

This chart below shows the tracks of all tropical cyclones in the 2012 Atlantic hurricane season. The points denote the location of each storm at 6-hour intervals, while the colors and symbols signify the storm’s intensity and corresponding category at each interval, respectively.

Hurricane tracks for the 2012 Atlantic Hurricane season

Hurricane tracks for the 2012 Atlantic Hurricane season

Climatologically, September is the busiest month for tropical cyclones in the Atlantic, producing an average of 3.5 named storms annually, 2.4 of which become hurricanes. In fact, of the 280 hurricanes that made landfall in the U.S. since 1851, over one-third of them (104) occurred in September.

It is at this time of the year when the tropical conditions are most conducive for tropical cyclone formation and development: Atlantic SSTs are at their warmest (generally in excess 26°C or 80°F), the tropical atmosphere is unstable and favorable for convection (i.e. thunderstorms), vertical wind shear is low, and there is usually a peak in frequency of rotating, low-level disturbances moving off of Africa across the tropics, which are the systems that eventually become tropical cyclones.

This month marks the notable anniversaries of several historic September hurricanes.

  • The 1903 Vagabond Hurricane celebrates its 110th anniversary on September 16, being the most recent hurricane to make first landfall in the state of New Jersey
  • Shortly thereafter on September 18 is the 10th anniversary of Hurricane Isabel, one of the top 5 costliest Mid-Atlantic hurricanes of all time
  • After that, September 21 marks the 75th anniversary of the 1938 New England Hurricane, the most intense and deadliest hurricane in New England history
  • Toward the end of the month is the 15th anniversary of Hurricane Georges on September 25, which made landfall in at least 7 different countries including the U.S. and at the time, was the costliest hurricane since Hurricane Andrew (1992)

With nearly half of the season to go, the 2013 Atlantic hurricane season may end up being one of the quietest seasons on record. However, as we have seen in years past, it also may be just getting started.