Insurance Firm Model Depicts Storm Surge Risk in Fine Detail

Before Hurricane Katrina, hurricane damage was typically thought of in terms of wind. Hurricane Andrew, for example, which set records as the most costly hurricane in history when it struck Miami and South Dade County in 1992, did at least $26 billion dollars worth of damage — mainly from wind. But Hurricane Katrina's winds were barely Category 3 strength when the storm hit land. Katrina, for all its destruction, was mainly a storm surge flood event. And Hurricane Ike, which struck Galveston, Texas, on September 13, 2008, was the third costliest hurricane on record and the costliest weather event ever to strike Texas — mainly because of damage done by storm surge flooding, the Insurance Journal observes (" Beyond the Flood Zone: Storm Surge Multiplies Coastal Vulnerabilities," by Stephanie K. Jones).

These recent events have motivated scientists and insurers to take a closer look at the risk of storm surge. In March, First American Spatial Solutions (FASS), a division of insurance firm First American Corp., released an extensive study of storm surge vulnerability, based on a complex computer model that overlays information about property characteristics and value on top of hurricane storm surge simulation models. FASS executive Dr. Howard Botts told Insurance Journal, "What we do is we build large, hazard risk data sets, tax data sets, sales and use tax, premium tax for the insurance industry. And we combine these very granular risk-hazard or tax databases with a geocoder that we developed, which takes an address and can get you right down to, literally, the rooftop." With that visual depiction of the financial risk, insurers hope to help property owners appreciate their exposure to hurricane flooding — and to motivate them to purchase flood insurance to cover that risk, which homeowners very commonly neglect to do unless a mortgage holder requires it. A preliminary FASS report, looking at ten vulnerable coastal locations in the U.S., is available online. The risk the study depicts is substantial: $234 billion of potential losses in the 13 urban areas examined. Miami tops the list, standing to suffer surge losses of $53.6 billion in the event of a Category 5 strike — double the wind-damage toll from 1992's Hurricane Andrew.