hurricane risk in the northeast united states a real and present danger robert p. hartwig, ph.d.,...
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Hurricane Risk in the Northeast United States
A Real and Present Danger
Robert P. Hartwig, Ph.D., CPCU, PresidentInsurance Information Institute 110 William Street New York, NY 10038
Tel: (212) 346-5520 Fax: (212) 732-1916 [email protected] www.iii.org
Northeast Communications Strategy MeetingInsurance Information Institute
New York, NY
March 19, 2008
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CATASTROPHICLOSS
What Will 2008 Bring?
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Most of US Population & Property Has Major CAT Exposure
Is Anyplace
Safe?
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U.S. Insured Catastrophe Losses*$7
.5
$2.7
$4.7
$22.
9
$5.5 $1
6.9
$8.3
$7.4
$2.6 $1
0.1
$8.3
$4.6
$26.
5
$5.9 $1
2.9 $2
7.5
$6.5
$100
.0
$61.
9
$9.2
$0
$20
$40
$60
$80
$100
$120
89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
20??
*Excludes $4B-$6b offshore energy losses from Hurricanes Katrina & Rita. Note: 2001 figure includes $20.3B for 9/11 losses reported through 12/31/01. Includes only business and personal property claims, business interruption and auto claims. Non-prop/BI losses = $12.2B.Source: Property Claims Service/ISO; Insurance Information Institute
$ Billions
2006/07 were welcome respites. 2005 was by far the worst year ever for insured catastrophe losses in the US, but the worst has yet to come.
$100 Billion CAT year is coming soon
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Inflation-Adjusted U.S. Insured Catastrophe Losses By Cause of Loss,
1987-2006¹
Fire, $6.6 , 2.2%
Tornadoes, $77.3 , 26.0%
All Tropical Cyclones, $137.7 ,
46.3%
Civil Disorders, $1.1 , 0.4%
Utility Disruption, $0.2 , 0.1%
Water Damage, $0.4 , 0.1%Wind/Hail/Flood,
$9.3 , 3.1%
Earthquakes, $19.1 , 6.4%
Winter Storms, $23.1 , 7.8%
Terrorism, $22.3 , 7.5%
Source: Insurance Services Office (ISO)..
1 Catastrophes are all events causing direct insured losses to property of $25 million or more in 2006 dollars. Catastrophe threshold changed from $5 million to $25 million beginning in 1997. Adjusted for inflation by the III.2 Excludes snow. 3 Includes hurricanes and tropical storms. 4 Includes other geologic events such as volcanic eruptions and other earth movement. 5 Does not include flood damage covered by the federally administered National Flood Insurance Program. 6 Includes wildland fires.
Insured disaster losses totaled $297.3 billion from
1987-2006 (in 2006 dollars). Wildfires accounted for
approximately $6.6 billion of these—2.2% of the total.
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The 2008 Hurricane Season:
Preview to Disaster?
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Outlook for 2008 Hurricane Season: 25% Worse Than Average
Average* 2005 2008F
Named Storms 9.6 28 13Named Storm Days 49.1 115.5 60
Hurricanes 5.9 14 7Hurricane Days 24.5 47.5 30Intense Hurricanes 2.3 7 3
Intense Hurricane Days 5 7 6
Accumulated Cyclone Energy 96.2 NA 115
Net Tropical Cyclone Activity 100% 275% 125%*Average over the period 1950-2000.Source: Philip Klotzbach and Dr. William Gray, Colorado State University, December 7, 2007.
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Landfall Probabilities for 2008 Hurricane Season: Above Average
Average* 2008F
Entire US East Gulf Coast 52% 60%US East Coast Including Florida Peninsula
31% 37%
Gulf Coast from Florida Panhandle to Brownsville
30% 36%
Caribbean NA Above Average
*Average over the past century.Source: Philip Klotzbach and Dr. William Gray, Colorado State University, December 7, 2007.
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Hurricane Risk in the Northeast
Is it Real?
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Source: AIR Worldwide
Insured Losses: $110BEconomic Losses: $200B+
$70
$30
$5 $4 $1$0
$20
$40
$60
$80
NY NJ PA CT Other
Nightmare Scenario: Insured Property Losses for NJ/NY CAT 3/4 Storm
Total Insured Property Losses =
$110B, nearly 3 times that of
Hurricane Katrina
Distribution of Insured Property Losses,
by State, ($ Billions)
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Number of Hurricanes Directly & Indirectly Affecting the Northeast Since 1900
22
148912
6
39
33
23
31
4
20
0
8
0
5
10
15
20
25
30
35
40
45
DE NJ NY CT RI MA NH ME
Direct Total, Direct & IndirectTropical cyclone activity in the Northeast is not all
that uncommon
Source: New Hampshire Office of Emergency Management
NY has been affected by 23
hurricanes since 1900
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Track of “Long Island Express” Hurricane of 1938
Source: WeatherUnderground.com, accessed February 4, 2006.
“Great New England Hurricane” of 1938 a.k.a.“Long Island
Express” caused severe damage through much of
the Northeast.
600+ Deaths
$308 million
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Storm Season of 1944:A Busy one for the Northeast
Three storms affected NY, NJ and New England in 1944, including “Great
Atlantic Hurricane”
46 deaths
$100 million damage
109mph gusts in Hartford
Source: WeatherUnderground.com, accessed May 31, 2006; NOAA loss & fatality figures.
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Storm Season of 1954:The Northeast Hit Again
NY/New England areas hit by Carol & Edna two
weeks apart
Carol: 8-10 ft. floodwaters in
Providence
Edna hits Cape Cod
Combined: 80 deaths, $501 million losses
Source: WeatherUnderground.com, accessed May 31, 2006; NOAA loss & fatality figures.
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Storm Season of 1960:Brenda & Donna Came to Visit
NY/New England areas were hit twice in 1960.
Donna killed 50, $387 million damage along East Coast
Source: WeatherUnderground.com, accessed May 31, 2006; NOAA loss & fatality figures.
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After a 25 Year Hiatus, Hurricane Gloria Hit in 1985
Source: WeatherUnderground.com, accessed May 31, 2006; NOAA loss & fatality figures.
NY/New England areas were hit by Gloria 9/27/85
8 deaths
$900 million damage
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Floyd Visited in 1999, Causing $4.5 Billion in Losses
Source: WeatherUnderground.com, accessed September 16, 2007; NOAA loss & fatality figures.
NY/New England areas were hit by Floyd 9/14 – 9/17/99
$4.5 B in damage US
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NY FAIR Plan: Total Policies In-Force, 2002-2006
Source: PIPSO; Insurance Information Institute
66,299
74,924 75,301
69,50667,969
50,000
60,000
70,000
80,000
2002 2003 2004 2005 2006
In the five-year period between 2002 and 2006, the total number of policies
in-force in the NY FAIR plan grew slightly by 2.5 percent.
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NY FAIR Plan Exposure to Loss ($000)
Source: PIPSO; Insurance Information Institute
$12,927.1$12,021.7
$11,148.9$10,119.8
$9,054.7
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
2002 2003 2004 2005 2006
In the five year period from 2002 to 2006, total exposure to loss in the NY
FAIR plan increased by 43 percent from $9.1 billion to $12.9 billion.
($ 000)
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Historical Hurricane Strikes and Population
Growth Along the Northeast Coast
A Collision Course
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Historical Hurricane Strikes in Atlantic County, NJ, 1900-2007
Source: NOAA Coastal Services Center, http://maps.csc.noaa.gov/hurricanes/pop.jsp/; Insurance Info. Institute.
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Historical Hurricane Strikes in Nassau County, NY, 1900-2007
Source: NOAA Coastal Services Center, http://maps.csc.noaa.gov/hurricanes/pop.jsp/; Insurance Info. Institute.
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Historical Hurricane Strikes in Suffolk County, NY, 1900-2007
Source: NOAA Coastal Services Center, http://maps.csc.noaa.gov/hurricanes/pop.jsp/; Insurance Info. Institute.
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Historical Hurricane Strikes in Queens, NY, 1900-2007
Source: NOAA Coastal Services Center, http://maps.csc.noaa.gov/hurricanes/pop.jsp/; Insurance Info. Institute.
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Historical Hurricane Strikes in New London County, CT, 1900-2007
Source: NOAA Coastal Services Center, http://maps.csc.noaa.gov/hurricanes/pop.jsp/; Insurance Info. Institute.
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Historical Hurricane Strikes in Newport County, RI, 1900-2007
Source: NOAA Coastal Services Center, http://maps.csc.noaa.gov/hurricanes/pop.jsp/; Insurance Info. Institute.
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Historical Hurricane Strikes in Barnstable County*, MA, 1900-2007
Source: NOAA Coastal Services Center, http://maps.csc.noaa.gov/hurricanes/pop.jsp/; Insurance Info. Institute. *Cape Cod area.
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Historical Hurricane Strikes in Dukes County*, MA, 1900-2007
Source: NOAA Coastal Services Center, http://maps.csc.noaa.gov/hurricanes/pop.jsp/; Ins. Info. Inst. *Martha’s Vineyard area.
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