Until Hurricane Katrina in 2005, 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 whole 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.
Armed with that knowledge, First American Spatial Solutions (FASS)
, a provider of spatial and natural hazard risk solutions and a member of The First American Corporation family of companies, developed a model to analyze storm surge exposure at the individual property level.
An FASS report released in late March illustrates the exposure of single residential structures to storm surge in 13 key geographic areas. FASS determined the top five U.S. metropolitan areas in terms of storm surge exposure are: Miami; New Orleans, La.; Tampa, Fla.; Charleston, S.C.; and Virginia Beach, Va. The numbers are massive. The storm surge exposure to Miami alone in the event of a Category 5 hurricane $53.6 billion, according to the report.
With the start of hurricane season looming, forecasters are predicting an above-average year for Atlantic hurricanes and a heightened risk that one will threaten the U.S. coastline.
With this in mind, Insurance Journal’s Stephanie K. Jones spoke with Dr. Howard Botts, vice president and director of development for First American Spatial Solutions, about the product his team has developed and how it might be used.
Dr. Botts began by describing his company and talking about why and how First American developed the storm surge product.