With the 2018 Atlantic hurricane season underway, the (re)insurance industry is still reflecting on the events of last year. The 2017 season will be remembered as one of the most active, damaging, and costliest seasons on record, and specifically for the impacts of three storms: Harvey, Irma, and Maria.
RMS followed its longstanding strategy of delivering thoughtful and thorough analysis of all available data sources when responding to the events of 2017, including the use of instrumentation and in-person RMS staff research and reconnaissance.
RMS has released its 2017 North Atlantic Hurricane Season Review documenting one of the most active, damaging, and costliest seasons on record. The 2017 season saw a total of 17 named storms, with ten of these storms reaching hurricane strength and occurring consecutively within a hyperactive period between August and October. The season will be remembered for its six major hurricanes and specifically for the impacts of three of these storms: Harvey, Irma, and Maria.
Jeff Waters, product manager – Model Product Management, RMS
Mark Hoekzema, chief meteorologist, Earth Networks
As we have already seen during the 2017 North Atlantic hurricane season, tropical cyclones such as Harvey, Irma, and Maria cause an array of impacts to homes, businesses, and people, each with varying drivers of damage and recovery timelines. The resulting effects from these and other events reinforce the importance and value of preparedness and responsiveness when managing hurricane risk.
Having an accurate view of the extent and severity of hurricane hazard is imperative in informing effective event response strategies — both throughout a real-time event, and for efficient claims management processes afterwards. It can help insurers anticipate claims locations, counts and overall impacts to their book, where power outages and business interruption are likely to occur, where to deploy claims adjusters of various experience levels, and identify where fraudulent claims are likely (or unlikely) to occur.
I invite you to explore the latest digital edition of EXPOSURE Magazine, which also hit the streets of Monte Carlo as a print edition for those attending Les Rendez-Vous de Septembre, and will be available at RMS events over the coming months.
There is a clear mission for EXPOSURE, which is “… to provide insight and analysis to help insurance and risk professionals innovate, adapt and deliver.” And change is in the air for all businesses in the industry, whether it is developing new opportunities, getting products to market faster, being more agile and efficient, or using data-driven insight to transform decision making.
The midway point of the Atlantic hurricane season has just passed, and despite a relatively tame start, we have already witnessed two major U.S. hurricane landfalls — Harvey and Irma — in quick succession. It is the first calendar year on record where two hurricanes of Category 4 strength or greater have made landfall in the contiguous U.S. To add insult to injury, Maria has quickly intensified and is expected to be the fourth major hurricane of the season as it tracks through the Leeward Islands, an area left devastated by Irma less than two weeks ago.
With 13 named storms, seven hurricanes, and three major hurricanes, we have already met the National Oceanic and Atmospheric Administration (NOAA) definition of an above-average full Atlantic hurricane season. It is understandable that many in the insurance industry may be suffering from “hurricane fatigue” well before the calendar flips over to October.
Shortly after its landfall, my colleague, Ben Brookes, and I drew attention in the RMS live Harvey updates to the fact that the storm was “not a wind event.” Like Sandy, flood losses, we wrote, would quickly overtake wind losses.
We recalled how Dr. Robert Muir-Wood had insisted back in February 2014 that “water is the new wind.” Those with exposure in harm’s way, he argued, needed to “get to grips with the details of modeling and managing hurricane-driven flood risk.”
RMS continues to refine its estimate of the insured losses from Harvey. In the meantime, I think it’s worth looking in more detail at the potential exposure of the National Flood Insurance Program (NFIP) to this major hurricane.
Last Monday, Daniel wrote that it was likely that “Harvey will produce at least US$4 billion in flood claims, triggering the NFIP reinsurance program.” With NFIP up next month for reauthorization and reform, this is an important point — and not just for the 25 reinsurers underwriting over US$1 billion of NFIP’s claims.
As Hurricane Harvey barreled eastward from Houston, Port of Houston officials spoke of restarting operations by Labor Day (Monday, September 4) after its channels are checked for shoaling and obstructions. The eighth busiest container port in the U.S. reported no major damage to its terminals, warehouses or storage facilities, and traffic was diverted to other regional ports and processing facilities away from the storm’s path. Maritime officials, it seems, have learned lessons from Superstorm Sandy, where cargo was hastily unstacked in anticipation of high winds before a devastating storm surge caused extensive damage to cargo, chassis, and port warehouses.
Farhana Alarakhiya, vice president – Products, RMS
Hurricane Harvey continues to be top of mind at the RMS offices. On Wednesday, RMS hosted a client webinar where Mark Powell, Tom Sabbatelli and Pete Dailey discussed how we have applied our methodology developed for the RMS U.S. High Definition (HD) Flood Model to provide insights to the extent and severity of the flooding from Harvey, with Houston as our top priority. This effort has resulted in a high-fidelity hazard inundation map which is now available to all RMS clients.
For clients on the RMS(one)® platform who use Exposure Manager, this effort goes one step further. We automatically seed the Harvey hazard layer in the client tenant, to deliver instantaneous access to analytic insights from the U.S. Inland Flood HD Model. This models all sources of flooding across space and time, and can also be used to identify and differentiate locations at risk based on flood extent and severity.
Michael Young, senior director – Product Management, RMS
Hurricane Harvey is now driving catastrophic flooding across the entire Houston Metropolitan region. The behavior of the storm is almost without precedent, and Harvey has already broken all U.S. records for tropical cyclone-driven extreme rainfall with observed cumulative amounts of 51 inches (129 centimeters) – far exceeding Allison in 2001, along with Claudette in 1979, and Amelia in 1978, not only in volume but also regional extent.
While we will continue to refine our modeling parameters for the Category 4 wind and storm surge that Harvey generated on Saturday, our clear focus is now on the inundation of Houston, the fourth largest city in the U.S. The storm has achieved a paradigm shift, and we have mobilized all our capabilities to apply the tools, data and processes developed for the RMS U.S. High Definition (HD) Flood Model to provide insights to the extent and severity of the flooding, with Houston as our top priority.