Filed Under:Markets, E&S/Specialty

Superstorm Sandy 5 years later: What have we learned?

A new report from Allianz reviews Superstorm Sandy losses and makes recommendations for mitigating risk.

Metropolitan Transit Authority (MTA) workers demonstrate placing flood-prevention barriers to block a subway entrance, during a media tour of transit facilities with post Superstorm Sandy flood resiliency upgrades hosted by MTA Chairman Joseph Lhota, center, and MTA Sandy Program Manager Robert Laga, second from left, Oct. 27, 2017, in New York. (AP Photo/Bebeto Matthews)
Metropolitan Transit Authority (MTA) workers demonstrate placing flood-prevention barriers to block a subway entrance, during a media tour of transit facilities with post Superstorm Sandy flood resiliency upgrades hosted by MTA Chairman Joseph Lhota, center, and MTA Sandy Program Manager Robert Laga, second from left, Oct. 27, 2017, in New York. (AP Photo/Bebeto Matthews)

It’s clear that 2017 is one of the most active hurricane seasons in several years, with Tropical Storm Philippe — the 16th named storm of the year — crossing South Florida and moving into the Bahamas on Oct. 29, the five-year anniversary of Superstorm Sandy. At the same time, the Northeast was facing a Nor’easter, bringing heavy wind gusts and high tides, causing power outages and localized flooding.

Superstorm Sandy, which pummeled the Eastern seaboard on Oct. 29, 2012, has been rated as one of the deadliest windstorms to have occurred in 40 years. Looking back on Sandy’s landfall, Allianz Global Corporate & Specialty (AGCS) has released a new report titled “From Sandy to Maria: Increasingly Destructive ‘Perfect Storms’.”The report analyzes what made Sandy unique, the 2017 Atlantic hurricane season, and what policyholders can do to prepare for the “new normal” of extreme weather events.

AGCS notes that storms represent 40% of natural hazard claims, making them the fifth top cause of loss for businesses. Sandy caused total economic losses of $70 billion, but claims and court cases are ongoing, which may result in an increase in the total.

To put Sandy in historical perspective, the storm had ranked between Hurricane Katrina with $160 billion in losses and Hurricane Andrew with $48 billion as the second costliest U.S. hurricane. That “record” stood until 2017 when Hurricane Harvey struck in August. Estimates for losses from Harvey are still being calculated, but they’re estimated to range between $70 billion and $108 billion. Economic losses from Hurricane Irma and Hurricane Maria continue to add up as Puerto Rico, the U.S. Virgin Islands, and other areas struggle with the recovery and restoration process.

Impact of rising sea levels

“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.”

According to AGCS, the severity of losses from weather events is already increasing. The average amount paid for extreme events — including windstorms — by insurers between 1980 and 1989 was $15 billion a year, but between 2010 and 2013 the average amount climbed to an average of $70 billion a year.

What made Sandy unique?

Several things coincided to make Sandy into a “superstorm,” wreaking havoc on areas like Manhattan’s Financial District that never expected to experience flooding. The AGCS report points to these factors as significant:

  •  Sandy hit the New York Metro area during high tide, which dramatically increased the height of the storm surge.
  • The full moon also made the storm surge worse, because high tides along the Eastern Seaboard rise about 20% during a full moon phase3.
  • Sandy approached the area from the East. This unusual path maximized the winds and storm surge directed at the shores of Long Island, Connecticut and New Jersey.
  • Sandy was a slow-moving storm, resulting in more sustained damage.
  • Sandy was massive in terms of geographic area, with a diameter of gale force winds reaching more than 1,000 miles.

Related: Suit against insurance broker over Superstorm Sandy losses can continue says N.Y. court

Concrete baffle wall designed to protect homes from storm surge in place in Belle Harbor NY

A high concrete wall constructed since Superstorm Sandy five years ago was erected to help protect area homes along the beach in the Belle Harbor neighborhood of the Rockaways, Oct. 12, 2017, in New York. The walls are supported by 22-foot steel pilings driven into the ground to withstand storm surge and flooding from potential future hurricanes. (AP Photo/Kathy Willens)

Preparing for storm surges


One of the biggest loss factors from Sandy was that the storm changed from a wind event to a high water event, the report notes. Traditional planning for dealing with storms were ineffective during Sandy. For example, in the Ocean Marine area, AGCS points out that preparation was focused on unstacking containers and placing boxes lower, which resulted in more flood losses.

“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,” says Varney.

Related: 7 tips to speed business insurance recoveries from Hurricane Harvey

As a result of the carrier’s experience with Sandy and the issues its clients faced as well as claims for damage, AGCS is helping all its clients, especially those involved in shipping, prepare for storm surges with the following recommendations:

– Redesign the container layout, raise tarmacs and add drainage systems.

– Calculate the water accumulation in play at any given port at any time.

– Monitor the National Weather Service’s new Storm Surge Watch/Warning Map for Atlantic tropical cyclones. The new warning system will be issued for all life-threatening storm surges or flooding that is forecast for the Gulf States and East Coast of the U.S.

– Monitor the Federal Emergency Management Agency’s (FEMA) revised flood studies and mapping in the areas affected by Sandy — driven by changes in methodology and political forces — and participate in helping FEMA plan accordingly.

– Develop and maintain a formal flood emergency plan if your business is located in or close to a flood zone.

– Consider installing emergency generators that can operate a portion, if not all, of the critical equipment if your facility should experience a flood loss.

– Depending on the construction and design of your building, use flood gates and flood doors to reduce the amount of flood water that enters the building.

– Raise all equipment critical to the operation of your building, like electrical switchgear, transformers, generators, and fire pumps, to a level above the 1,000-year flood elevation.

Related: The truth about 100-year floods

What about flood insurance?


There is much debate over whether to obtain flood insurance and from what source for businesses and residences. As many property owners have learned, to their dismay, flooding can occur from heavy rains, not just from hurricanes or other natural disasters. Swollen rivers can overflow, and higher than normal tides can surge farther inland than expected.

The first thing property owners should do is consult FEMA’s flood maps for the areas in which they have facilities or homes. As a result of Sandy, flood maps for many locations are under review and may be redrawn to include more property within the flood zones. Until updated flood maps are issued for affected areas, AGCS says, existing flood insurance rates are assessed on the prior effective Flood Insurance Rate Maps These maps are available on the FEMA website, the report explains, and they outline flood zones and actual heights based on sea level of locations in various flood zones.

Related: In Harvey and Irma’s wake agents and brokers need to pay attention to flood insurance reform

Even though your property or facility is not within an official flood zone, assessing your risk, obtaining flood insurance and taking extra precautions will help you survive another superstorm and get back in business faster.

The report is available from the Allianz Global Corporate & Specialty website.

Related:

New report details financial impact of September’s historical natural disasters

Senate passes $36.5B hurricane relief, NFIP funding & wildfire fighting bill

Related

Insurers, environmentalists are natural allies in climate change battle

Some may assume insurers aren't taking the lead when it comes to raising climate change awareness. That's not the case.

Featured Video

Most Recent Videos

Video Library ››

Top Story

5 social marketing trends for insurance agents in 2018

Social media marketing has been accepted as one of the best practices for spreading an insurance marketing message and establishing a brand.

Top Story

20 safest airlines to fly with in 2018

To recognize those leading the way, AirlineRatings.com released its annual list of the world's safest airlines. Of the 409 airlines it monitors, 20 stand out as the 'best of the best.'

More Resources

Comments

eNewsletter Sign Up

Specialty Markets Insight eNewsletter

Receive updates and analyses on hard to place and challenging coverages. Sign Up Now!

Mobile Phone

Advertisement. Closing in 15 seconds.