This winter has brought a barrage of storms and Arctic air to more than half of the U.S., notably the New England region, resulting in record amounts of snow, sleet, freezing rain, and bitterly cold temperatures.
Arguably, no other major city has been more directly impacted than Boston, Massachusetts. As of March 9, the city has received 105.7 inches of snow this season – over three times the average seasonal total for the region! It’s the second snowiest season on record, behind only the 1995-1996 season, which brought 107.6 inches of snow. Further, February 2015 marks the snowiest month reported (more than 60 inches) and the second coldest February on record.
Damage reports from this season’s snowstorms include roof collapses, building collapses, burst pipes, power outages, and business interruption. The Massachusetts Emergency Management Agency reported more than 160 collapsed buildings or buildings at risk of collapse since February 9 with damage mainly driven by dense snow pack and strong winds. As of February, Boston has already spent a record $35 million on snow removal – almost double the allotted total of $18.5 million.
U.S. Winterstorm Risk Map. Loss cost per $1000 for Residential lines at the ZIP code level, based on RMS U.S. Winterstorm Model output using the RMS 2011 U.S. Winterstorm IED.
Businesses and supply chains have been interrupted as well. A combination of snowstorms, cold weather, and ice has closed thousands of businesses, resulting in lost wages for hourly workers. These events have disrupted all forms of travel, restricting trucks and air freight from reaching their destinations and leading to increased prices for certain goods.
All in all, these types of impacts can result in significant economic and insured damages. According to a study by IHS Global Insight, a one-day snow-related shutdown would cost some states as much as $300-700 million in economic losses.
Insured loss estimates from the cluster of February storms (five in total) that swept through parts of the Ohio Valley, Mid-Atlantic, and Northeast are likely to exceed $1 billion, which is in line with annual averages. RMS model analysis shows that on average, about $2-3 billion in U.S. annual insured losses are caused by winter storms, which can produce a combination of snow, ice, freezing rain, and frigid temperatures. This is about 5-10% of the overall U.S. average caused by perils including hurricanes, severe convective storms, floods, and winter storms.
Whether it is in regards to the harsh winters of the last few years or future winters to come, it is important for the (re)insurance industry to be adequately prepared so insured losses remain at a minimum.