Storm Ida causes flash flooding in U.S. Northeast
Storm Ida causes flash flooding in U.S. Northeast -
Dramatic media coverage of severe flooding in central New York and other areas such as New Jersey showed the effects of record breaking amounts of rainfall over areas already saturated by tropical storm Henri from last month.
The rainfall was caused by the remnants of hurricane Ida passing over New York and producing “extreme rain rates” according to The National Weather Service of up to 3 inches per hour. The city of New York recorded its highest one-hour rainfall and because of the flash flooding, subway lines were inundated, vehicles were washed away, and flights were grounded. Unfortunately, it is reported that some 40 lives were lost as a result of the suddenness of the flash floods.
Comments
From an insurance point of view, it is the case that standard residential policies do not cover this type of flooding. The National Flood Insurance Program (“NFIP”) provides flood cover to householders (who opt to buy it) which in turn is reinsured in the commercial market.
Commercial property policies do tend to cover flood, and there are also likely to be considerable auto claims. Losses will probably aggregate for reinsurance purposes with the previous insured losses caused by Hurricane Ida.
Various industry estimates for Ida so far (excluding the latest flooding) have been as follows:
- KBW analysts – c US$25bn;
- Karen Clark & Company (KCC) close to $18 billion for impacts in the Caribbean and the U.S., although this excludes losses related to boats, offshore properties, or NFIP losses;
- Corelogic has estimated insured losses from Ida might be from US$14bn up to US$21bn;
- Twelve Capital – US$15bn to US$25bn;
- AIR Worldwide has estimated that insured wind and storm surge losses to onshore property resulting from Hurricane Ida will range from $17bn to $25bn.
Overall, the flooding will prolong the time taken for insurers and reinsurers to establish the most likely cost of Ida. As Aon’s Impact report mentioned “It will take many months or longer for the financial view of this event to fully develop. Loss estimates will be subject to several revisions as more data is obtained.”
This will likely affect the reinsurance renewals at year end and possibly cause the trapping of some ILS capital.