RMS assesses the potential for Hurricane Harvey to elevate to “Super Cat” status as Houston and the other impacted regions face up to one of the most devastating floods in U.S. history.

At time of writing, flood waters from Hurricane Harvey are continuing to inundate Houston. While initial loss estimates for wind and surge-related damage from the Category 4 storm are limited, the catastrophic flooding across southeastern Texas and southern Louisiana, including the greater Houston metropolitan area, has escalated the scale of the event to Katrina-like levels.

While still at a very early stage of assessment, expectations are that Harvey will prove to be the largest tropical cyclone flooding event in U.S. history. 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.

“The stalling of Harvey over the coast prior to landfall increased moisture absorption from the exceptionally warm waters of the Gulf of Mexico,” explains Robert Muir-Wood, chief research officer at RMS, “resulting in unprecedented rainfall causing flooding far beyond the capacity of Houston’s retention basins, drainage systems and defenses.”

“This is a completely different driver of damage compared to wind … due to the time it takes the flood waters to recede” — Paul Wilson, RMS

Unlike Harvey’s wind footprint, which didn’t affect the most highly populated coastal areas, Harvey’s flood footprint sits squarely over Houston. The exposed value is indeed vast — there are over seven million properties with over US$1.5 trillion in value in the Houston area. This is almost 10 times more exposed value, in today’s prices, than what was affected by Hurricane Katrina 12 years ago.

“From a wind damage and storm surge perspective, Harvey would have ranked as one of the smallest Cat 4 loss impacts on record,” says Paul Wilson, vice president of model development at RMS. “But the flooding has considerably amplified the scale of the loss. You are seeing levy breaches due to overtopping and reservoirs close to overflowing, with huge amounts of rainwater dropping into the river networks. This is a completely different driver of damage compared to wind, as it results in a much longer impact period due to the time it takes the flood waters to recede, which significantly extends the duration of the damage.”

This extension looks set to elevate Harvey to “Super Cat” status, a phrase coined in the aftermath of Hurricane Katrina and the subsequent storm-surge flooding of New Orleans.  In its most simple form, a Super Cat occurs when the loss experience begins to far exceed the losses from the physical drivers of the event. RMS estimates that the economic loss from this event could be as high as US$70-90 billion in total from wind, storm surge and inland flood, which includes damage to all residential, commercial, industrial and automotive risks in the area, as well as possible inflation from area-wide demand surge.

“In some of the most extreme catastrophes, the level and extent of disruption reaches levels where the disruption itself starts to drive the consequences,” Muir-Wood explains, “including the extent of the insurance losses. Disruption can include failures of water, sewage and electricity supply; mandatory evacuation; or where buildings are too damaged for people to return. Further, economic activity is severely disrupted as businesses are unable to function. As a result, businesses fold and people move away.”

“Super Cat events therefore have a huge potential impact on commercial and industrial business interruption losses,” Wilson adds. “Even those commercial properties in the Houston area which have not been directly impacted by the floods will suffer some form of loss of businesses from the event.”

Muir-Wood believes Harvey’s Super Cat potential is significant. “Tens of thousands of properties have been flooded, their occupants evacuated; while many businesses will be unable to operate. We can expect significant expansions in BI losses from industrial facilities such as oil refineries and local businesses as a result, which we would identify as Super Cat conditions in Houston.”

Such events by their very nature test modeling capabilities to their limits, adding much greater complexity to the loss dynamic compared to shorter-term events.

“Quantifying the impact of Super Cats is an order of magnitude harder than for other catastrophic events,” Wilson explains. “For example, trying to quantify the degree to which a major evacuation leads to an increase in BI losses is extremely challenging — particularly as there have only been a handful of events of this magnitude.”

There are also a number of other post-event loss amplification challenges that will need to be modeled.

“Super Cat consequences can happen in addition to other sources of post-event loss amplification that we include in the models,” Muir-Wood says. “These include demand surge resulting from an escalation in labor and materials due to shortages after a major catastrophe; claims inflation due to insurers relaxing how they monitor claims for exaggeration because they are so overwhelmed; and coverage expansion, where insurers end up paying claims that are beyond the contractual terms of the original coverage.”

Fortunately, model advances are enabling a much more granular assessment across the loss spectrum, Wilson believes. “We’re able to apply extremely high-resolution models to all aspects of the loss, especially with our new U.S. flood models, including very specific hydrological modeling capabilities. We’ve also introduced the ability to model flood defenses and the probability of failure, as a result of Sandy and Katrina, as well as more granular data on property elevation and the impact of basement flooding, which was a major issue for commercial properties during Sandy.”

Such model advances will need to continue at pace, however, as Super Cat events have the clear potential to become an increasingly frequent occurrence.

“Such events are triggered by major metropolitan urban centers,” Wilson explains. “There are specific locations within our model which have to be hit by catastrophes which have a significant impact damage for us to even acknowledge the potential for a Super Cat. Increases in urban populations and the expansion of ‘downtown’ areas are raising the potential for events of this scale, and this will be exacerbated by climate change and rising sea levels, coupled with a lack of robust flood defenses.”

Hurricane Harvey  

Harvey rapidly developed from a tropical depression to a Category 4 major hurricane in 48 hours, and intensified right up to making landfall.

It made landfall between Port Aransas and Port O’Connor, Texas, at around 22:00 local time on Friday, August 25, with maximum sustained wind speeds of around 130 mph (215 km/hr).

Approximately 30,000 residents of Houston were reported to have been evacuated as the storm approached.

Harvey is the first major hurricane (Category 3 or greater) to make landfall in the U.S. since Hurricane Wilma in 2005, and the first Category 4 hurricane to make landfall in the U.S. since Hurricane Charley in 2004.