NEWARK, CA – January 25, 2023 – Moody’s RMS®, the leading global catastrophe risk modeling and solutions company, estimates total U.S. economic losses from the recent California flooding at US$5-7 billion. This estimate reflects inland flood impacts for the U.S. and includes damage to infrastructure. The insured losses are anticipated to be between US$0.5-1.5 billion, including losses to the National Flood Insurance Program (NFIP) and the private flood market.
The overall economic loss estimate is based on an event reconstruction using the Moody’s RMS U.S. Inland Flood HD Model and reflects property damage, contents, and business interruption, across residential, commercial, industrial, automobile and infrastructure assets.
A series of extratropical cyclones starting December 26, 2022, impacted the West Coast of the U.S, which resulted in heavy rainfall, overtopped rivers, flash floods, levee breaches, mudslides, fallen trees, debris flow, and heavy snow at high altitudes, together with some wind damage.
The rainfall associated with these extratropical cyclones was exacerbated by a band of high atmospheric water vapor, also known as an ‘atmospheric river’.
The rainfall intensity in California was so extreme that several locations in central California set new three-week rainfall records and certain locations received their annual average rainfall totals in less than one month.
This led to widespread flash floods and river overtopping, for example, water depths in the San Lorenzo River upstream of Santa Cruz rose by more than 16 feet (4.87 meters) in less than eight hours. This was the highest recorded water depth for the San Lorenzo River since records began some 85 years ago.
Infrastructure damage, which is accounted for within the economic loss estimates, was extensive. State highways and local roads bore the brunt of the damage due to a combination of flooding and mudslides. Trees previously stressed by dry conditions were uprooted due to high water velocities, saturated soils and heavy winds, which also caused damage to power networks, as well as to cars and properties.
The continuous rainfall and compound impacts from riverine-groundwater-coastal interactions also resulted in prolonged flooding for certain urban coastal areas of California.
Furthermore, the continuous drought preceding these extratropical cyclones events adds an extra dimension of complexity for reservoir operators and residents. It is important to highlight that 2022 was the second driest year in over 128 years for certain areas (e.g., Santa Cruz) and was categorized under ‘extreme drought’ according to the National Integrated Drought Information System.
Although there has been a significant increase in the water levels of major reservoirs and snowpack, it remains unlikely that California is out of the drought, especially when it comes to aquifer replenishment, given the last three years of extreme drought and excessive groundwater withdrawals.
These storms generated high-intensity rainfall resulting in a high proportion of rainfall running off into the ocean, whereas aquifers generally recharge gradually from less intense rainfall systems and snow melt.
“To put this event in historical perspective with the 1862 ARkStorm, although some impacted areas are similar, the ARkStorm produced much more severe precipitation, for example, 35 inches (88.9 centimeters) of precipitation in San Francisco compared to ~ 15 inches (38 centimeters) from this event. Another important mitigating factor for this event is the presence of flood defenses, which were mostly absent in 1862,” said Mohsen Rahnama, Chief Risk Modeling Officer, Moody’s RMS.
A relatively small proportion of the economic damage is expected to be covered by insurance. The number of households in California with flood insurance stands at less than two percent – a figure that has been steadily declining. As of August 2022, there were only 193,281 residential National Flood Insurance Program (NFIP) policies in place, representing a decline of around five percent as compared to 2021.
These low flood insurance take-up rates are attributed to the fact that only homeowners holding a government-backed loan who live in Special Flood Hazard Areas (SFHAs) are mandated to obtain a flood insurance policy. But these SFHA boundary ‘flood zones’ do not always reflect the current flood risk, are backward-looking, and are infrequently revised.
Other factors impacting flood insurance take-up rates include, but are not limited to, affordability, the misconception that flood is covered under a standard homeowners’ policy, and a lack of understanding of the associated incurred cost from flooding.
Firas Saleh, Director, Product Management, Moody’s RMS, concluded: “Extreme drought leads to soil compaction which means less infiltration and more runoff, hence less aquifer recharge and higher risk of flooding. Nowhere is safe from flooding in California today. If we’ve learned anything from this extreme rainfall and subsequent damage, it’s that even perceived low-risk flood zones are still flood zones. If it rains, it can overflow.”
NEWARK, CA – 18 January 2023 – Moody’s RMS®, the leading global catastrophe risk modeling and solutions company, is pleased to announce that, as of the end of 2022, over 100 active clients have adopted and/or are utilizing applications and services on the Moody’s RMS Intelligent Risk Platform™ (IRP). Designed for unified risk analytics, the IRP is a software-as-a-service (SaaS) platform offering applications and services such as Risk Modeler, which enables all risk exposures to be prepared and managed in one place, ready for risk modeling, accumulation, and loss analysis using RMS High Definition™, Detailed Loss, and Aggregate Loss Models. The platform comes with application programming interfaces (APIs) available to deliver global hazard data, risk scores, and loss costs for touchless underwriting as well as real-time event response information, with applications such as ExposureIQ™ – which proved highly valuable during Hurricane Ian in 2022 – to establish the potential impact of an event on a client’s portfolio. The platform has gained significant traction among brokers, insurers, reinsurers, managing general agents (MGAs), and Lloyd’s syndicates across the globe, including Apollo, Tokio Marine, and Gallagher Re, and has also proved popular with banks and real estate asset managers keen to utilize the insights across their portfolios. The IRP removes the need to procure and maintain extensive, high-cost IT infrastructure environments required to support various risk modeling and analytics applications. Insurance and financial services clients also benefit from a quick onboarding process offering access to applications and associated models within days of subscribing. RMS risk models are available on the IRP from the latest High-Definition models, to Detailed Loss Models (DLM) and Aggregate Loss Models (ALM), using established RiskLink® and RiskBrowser® workflows familiar to the market. IRP applications are also designed to integrate with third-party and in-house systems used by insurance and financial firms to provide enhanced data insights. Clients using the cloud-based IRP have availability to the latest model data, with risk model updates integrated automatically with minimal downtime, without the requirement for maintenance and additional IT support. Cihan Biyikoglu, Executive Vice President, Moody’s RMS, said: “I am thrilled to see the great enthusiasm from our customers to the Intelligent Risk Platform. In this short period since its birth, we have customers across all major geographies, including Europe, the Americas, and Asia, and across insurers, reinsurers, and brokers modeling their accounts, portfolios, and underwriting on our platform every day. As one measure of engagement, we are already seeing hundreds of millions of commercial and residential locations analyzed daily on our platform, from earthquakes to hurricanes, and windstorms to climate change models.” “By Moody’s RMS successfully delivering a true SaaS application, clients have genuinely benefited from highly scalable automation and integration to create far more efficient end-to-end risk modeling workflows across business applications. And by clients adopting the IRP, we are also seeing an increasing number of businesses turning off their on-premises RiskLink or legacy analytics applications altogether. We look to further develop and enhance the IRP experience as the client base continues to grow and expand.”
LONDON – December 12, 2022 – Ardonagh Specialty, part of the Ardonagh Group, has signed a new agreement with RMS®, a Moody’s Analytics company and world-leading risk modeling and solutions company, to broaden their adoption of the RMS Intelligent Risk Platform™ and advance Ardonagh Specialty’s risk modeling and advisory capabilities using the RMS U.S. Flood HD Model and the RMS U.S. Wildfire HD Model. The partnership spans Ardonagh Specialty’s brands including Besso, Bishopsgate, Compass London Markets, Ed Broking, Inver Re, Piiq, and Price Forbes. Antony Erotocritou, CEO of Ardonagh Specialty said: “It has always been important to us that Ardonagh Specialty strives to offer increased value to our clients. Investment in differentiating data and analytics capabilities is a core part of our value proposition. We’re excited to partner with clients and markets, creating new value, and unlocking new opportunities for the industry. By extending our long-term partnership with RMS we are confident that all our clients will continue to benefit from the high levels of service and solutions we always aim to deliver.” Michael Steel, General Manager, RMS added: “We are delighted to extend and strengthen our work with Ardonagh. Advanced implementation of RMS Risk Modeler™ can only enhance the speed, precision, and consistency across all risk decisions across the portfolio. As the increased impact of major catastrophic events such as floods and wildfires continues to evolve, brokers and insurers are keen to embrace the latest science and technology to help them better understand the risks and opportunities they face. We’re delighted to help Ardonagh service their clients with distinction.” About Ardonagh Specialty Ardonagh Specialty is the holding company and growth platform for leading independent brokers Besso Insurance, Bishopsgate, Compass London Markets, Ed Broking, Inver Re, Piiq Risk Partners, and Price Forbes. Combined, Ardonagh Specialty has 1,400 colleagues globally and manages US$6 billion in gross written premium. With a strong presence and deep relationships worldwide, and a steadfast commitment to investing in the best people, markets, and technology, together the businesses offer open market programs, reinsurance, and international solutions designed to empower clients to achieve their strategic ambition.
Newark, CA – November 16, 2022 - RMS®, a Moody’s Analytics company and a world-leading risk modeling and solutions company, estimates total private market U.S. insured losses from Hurricane Nicole to be less than US$2 billion, with the best estimate of US$1.6 billion. This estimate represents insured losses associated with wind, storm surge, and precipitation-induced flooding. Total insured loss estimates for Hurricane Nicole (US$ billions): Wind (incl. coverage leakage) + Surge Inland Flood excl. NFIP Total excl. NFIP Best Estimate Private Market Insured Loss 1.2 – 1.8 < 0.1 1.3 – 1.9 1.6 RMS estimates privately insured wind and storm surge losses of US$1.2 billion to US$1.8 billion from Hurricane Nicole, based on analysis of ensemble footprints in Version 21 of the RMS North Atlantic Hurricane Models. RMS ensemble footprints are reconstructions of Nicole’s hazard that capture the uncertainties surrounding observed winds and storm surge. RMS modelers developed and validated the wind, storm surge, and inland flood reconstructions and corresponding loss estimates using publicly available observations, including wind stations, river gauge water level data, and web reconnaissance. Jeff Waters, Staff Product Manager, North Atlantic Hurricane Models, RMS, said: “Even though Hurricane Nicole was much less intense than Hurricane Ian a few weeks prior, it exhibited a large wind field that impacted many of the same areas in Florida. RMS Event Response teams estimate that roughly 98 percent of postal codes in Florida impacted by Nicole were previously impacted by Hurricane Ian. Similar to other overlapping events from previous seasons, such as Hurricanes Ida and Nicholas in 2021, and Laura and Delta in 2020, we expect the overlapping nature of Hurricane Ian and Nicole to introduce significant uncertainties in the loss attribution and claims settlement process.” Additionally, RMS estimates losses for the National Flood Insurance Program (NFIP) from Nicole to be less than US$300 million, and primarily in Florida and Georgia. These losses were derived using the RMS view of NFIP exposure based on policy-in-force data published by FEMA, the Version 21 RMS North Atlantic Hurricane Models, and the RMS U.S. Inland Flood HD Model. Losses reflect property damage and business interruption to residential, commercial, industrial, and automobile lines of business, and consider sources of post-event loss amplification (PLA), inflationary trends, and non-modeled sources of loss. RMS expects the majority of wind and storm surge losses to come from Florida, and the majority of the NFIP and insured flood losses to come from both Florida and Georgia. “Historically, an event of Hurricane Nicole’s magnitude would not exhibit notable PLA impacts if it were to occur on its own. However, the fact that it closely follows a major event with Hurricane Ian, means that the same factors influencing PLA from Ian also apply to Nicole, including shortages of labor, materials, and claims adjusters. This is an example of compounding PLA effects,” said Sarah Hartley, Manager, Event Response, RMS. Hurricane Nicole was the fourteenth-named storm of the 2022 North Atlantic hurricane season, the eighth hurricane, and the second hurricane to make U.S. landfall this season. Nicole made landfall on November 10, 2022, near Vero Beach, Florida as a Category 1 hurricane on the Saffir-Simpson Hurricane Wind Scale with maximum sustained winds of 75 miles per hour (120 km/h). The storm brought a combination of strong winds, storm surge, and heavy rainfall to coastal and inland areas of Florida, including many that are still recovering from Hurricane Ian. Hurricane Nicole briefly re-emerged into the Gulf of Mexico as a tropical storm before weakening to a tropical depression and moving back onshore, tracking northward through the southeast U.S., the Carolinas, and mid-Atlantic regions. Prior to impacting the U.S., Hurricane Nicole hit parts of the Bahamas as both a tropical storm and Category 1 hurricane. However, RMS expected insured losses to be minimal in that region. There are two weeks left in the 2022 Atlantic Hurricane season, which officially ends on November 30. RMS industry loss estimates for landfalling hurricanes provide a comprehensive view, reflecting modeled and non-modeled impacts from all major drivers of damage, including wind, storm surge, and inland flooding. END The technology and data used in providing this information is based on the scientific data, mathematical and empirical models, and encoded experience of scientists and specialists. As with any model of physical systems, particularly those with low frequencies of occurrence and potentially high severity outcomes, the actual losses from catastrophic events may differ from the results of simulation analyses. RMS SPECIFICALLY DISCLAIMS ANY AND ALL RESPONSIBILITIES, OBLIGATIONS, AND LIABILITY WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THIS INFORMATION OR USE THEREOF, INCLUDING ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE. 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