A new report by Allianz Global Corporate & Specialty (AGCS) outlines how increasingly destructive storms and their extraordinary costs are becoming a “new normal” in the U.S. The average amount paid for extreme events, including windstorms, by insurers between 1980 and 1989 totaled $15 billion a year; that figure rose to an average of $70 billion a year between 2010 and 2013.
To mark the fifth anniversary of Sandy’s landfall, a new report titled From Sandy to Maria: Increasingly Destructive ‘Perfect Storms’, analyzes what made Sandy unique, the current 2017 Atlantic hurricane season and what clients can do to prepare for the “new normal” of extreme weather events.
Key Factors in the “New Normal” of Higher Coastal Risks According to AGCS:
- Warming Climate (Regional Temp Changes)
- Rising Sea Levels
- Coastal Property Price Increases
- Coastal Population Increases
- Supply Chain Economics
“Extensive data has shown that the global average sea level has risen by eight to nine inches, resulting in an increased severity of storm surge along the U.S. coastlines,” says Thomas Varney, regional manager for Allianz Risk Consulting in North America. “The losses from Sandy and the current storm season clearly illustrate this point.”
The current Atlantic hurricane season is set apart by the high number of intense storms that have formed and by how many have made it to landfall; activity exploded in the late summer as eight consecutive hurricanes formed in a six-week period. Since hurricanes thrive on warm ocean water, it’s likely that rising ocean temperatures connected to climate change will provide even more opportunities for storms to rapidly intensify through November.
According to the report, AIR Worldwide estimates the value of insured property located along the coastal U.S. at around $17 trillion.
“It is a certainty that as the value of property in coastal areas increases, the financial impact of storm events becomes even more substantial. As such, many insureds are paying closer attention to prevention guides in relation to high wind, flooding and storm surge events,” added Varney.
Further analysis of AGCS claims also show that windstorm claims already account for 40 percent of natural hazard claims and are already the fifth top cause of loss for industrial companies. The latest recommendations AGCS provides its clients include monitoring the National Weather Services’ new Storm Surge Watch/Warning Map for Atlantic tropical cyclones, study FEMA’s revised flood maps, consider the installation of emergency generators, flood gates and doors as well as raise all equipment critical to building operations such as electrical switchgear and transformers.
Altogether, Allianz paid close to 1,400 claims totaling $337 million in payouts to insureds after Superstorm Sandy.
Read the full report: http://www.agcs.allianz.com/insights/white-papers-and-case-studies/hurricane-sandy-5-year-anniversary-report/