Beyond the Flood Zone: Storm Surge Report Shows Coastal Vulnerabilities

Homeowners can mitigate against wind damage, but they’re powerless, really, to do anything against storm surge,” said one researcher whose job it is to develop ways to determine the vulnerability of homes and other properties not only to storm surge, but wildfires, sinkholes, earthquakes and other natural perils.

Dr. Howard Botts, vice president and director of development for First American Spatial Solutions (FASS), said a report and model developed by his company are able to demonstrate how destructive, both physically and financially, storm surge can be.

The insurance industry-backed research group, Institute for Home and Business Safety (IBHS), is urging the National Flood Insurance Program and local communities to require higher elevation limits in storm surge zones, as well as more appropriately engineered foundation systems in coastal areas. It acknowledges, however, in a report produced following Hurricane Ike in 2008 that “it is virtually impossible to guarantee that a structure will not be destroyed if it is directly impacted by the eyewall of a major hurricane. Experience has shown that certain types of property, such as barrier islands and peninsulas, can literally be cut in two by a hurricane. Anything in such a storm’s path certainly will be devastated, regardless of foundation type or elevation.”

As Botts put it, “If you’re in a storm surge zone, you’re likely to be impacted by it.”

Until Hurricane Katrina in 2005, however, the impact of storm surge on the overall property losses caused by hurricanes was generally not in the forefront of concern to most residential property insurance companies. After all, storm surge was a flood loss not covered by the traditional homeowners insurance policy.

Katrina and the lawsuits that followed changed that mindset.

Insurers, and indeed the world, saw first-hand the amount of damage storm surge could produce. Just three years later, Hurricane Ike blasted ashore near Galveston, Texas, with a massive storm surge that helped it become the third most costly U.S. hurricane on record, largely due to the surge.

A member of the First American Corp. family of companies, FASS has access to information on around 90 percent of all the private properties in the United States, or at least 124 million separate addresses. The group has used that information to develop a model to analyze storm surge exposure at the individual property level.

The “2010 First American Storm Surge Report” released in late March illustrates the exposure of single residential structures to storm surge in 13 key geographic areas. The numbers are massive. The storm surge exposure to Miami alone in the event of a Category 5 hurricane is $53.6 billion, according to the report.

Flood Coverage or Not?

Insurance agents throughout the United States, and especially those whose customers own properties near the nation’s coastlines, are painfully aware that only a fraction of residential property owners that need the protection of flood insurance actually buy it. Even homeowners in areas that are at high risk for flooding sometimes are reluctant to spend the extra money, although the coverage is far less expensive than traditional property insurance.

Botts said the information provided by the storm surge hazard model could be a useful tool for agents and insurance companies to educate insureds about the danger of storm surge in vulnerable coastal areas – and in informing property owners of the need to buy flood insurance.

“What we do is we build large, hazard risk data sets, tax data sets, sales and use tax, and 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,” Botts said.

What this means for insurers and agents is that they can visibly show owners of properties along and near hurricane-prone coastlines just what the impact of storm surge from a Cat 1 or Cat 5 hurricane, or any size storm in between, would be on a particular insured’s property.

For example, the storm surge report released in March was designed “to look at 13 major residential property markets in the Gulf and Atlantic coastal region and understand, at a property-by-property level, which of these properties were in a storm surge potential area or would be exposed to storm surge,” Botts said. Then property-by-property the dollar value of those single family homes – the buildings only, not the contents – in potentially affected areas was determined.

“Storm surge moves with the forward speed of the hurricane – typically 10 mph to 15 mph,” the report stated. “One cubic yard of sea water weighs 1,728 pounds – almost a ton.”

Adding to the impact of the rushing water, are trees, pieces of buildings and other debris that act as a battering rams when they come into contact with a stationary object, such as another building.

Even areas that are not directly in the path of a hurricane can be hugely impacted, as evidenced during Hurricane Ike, when its storm surge powered north up Galveston Bay, along the east side of Houston.

“The southeast Texas communities of Bridge City, on Sabine Lake, and large areas of nearby Orange (80 miles from the center of landfall) were inundated by the storm surge. Bridge City saw all but a dozen homes flooded by the surge,” according to the report.

Other Models

“In a storm like Hurricane Ike, surges are far more dangerous than wind in a particular location,” said Bill Read, director of the National Hurricane Center in Miami, which is considering developing a storm surge model of its own.

According the NHC, 75 percent of the houses in Galveston were inundated, but the surge also submerged farmland and ranches in saltwater, scoured away beaches, and ruined thousands of acres of vegetation.

Botts said the proposed NHC model, which would not be completed for at least two years, would look at things differently than the way the FASS model does.

“What they’re really looking at is, once they have a pretty good idea of where a hurricane is going to strike, they can run their models, use them for evacuation and other kinds of planning purposes,” Botts said.

FASS, on the other hand, is “looking at the extreme or the worst-case scenario, where they’re looking at, real-time, what is this particular storm going to generate, which would make it impossible for planning and underwriting and other kinds of uses like our clients use it,” he said.

Listen to “Hurricanes and Storm Surge: Report Shows Just How Much Damage They Can Do,” a podcast interview with Dr. Howard Botts, online at www.insurancejournal.tv/videos/3622/.