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Superstorm Sandy marks its fifth anniversary this month, and risk managers warn that businesses must be prepared for the next big storm.
A report by Allianz Global Corporate & Specialty S.E., From Sandy to Maria, looks back on Sandy and forward to the new normal of more destructive storms.
“The 2017 Atlantic hurricane season is set apart by the number of intense storms that formed, and how many of those powerful systems made landfall,” the report said. “Hurricane activity exploded in the late summer, and there were eight consecutive hurricanes in a six-week period.”
Superstorm Sandy killed at least 233 people in eight countries and racked up an estimated $70 billion in total damage, the Allianz report said. The storm hit the New York metropolitan area at high tide, dramatically increasing the storm surge. The massive storm approached from the east, an unusual path, and moved slowly, which resulted in more sustained damage.
Andrew Higgins, technical manager of the Americas for Allianz Risk Consulting in Pinehurst, North Carolina, said hurricanes coming through the northern corridor of New York, Connecticut and Massachusetts are fairly infrequent but they do occur.
“If and when a hurricane does hit the Northeast, the damage is going to be tremendous like it was with Sandy,” Mr. Higgins said. “That’s pretty much assured. We’ve got so much more development, so many more buildings, so many more people in harm’s way, that any storm that hits the area is going to result in tremendous losses.”
The report said that most scientists agree that due to the warming seas, the severity
of windstorms will change in future.
“Based on Allianz’s experience, the severity of losses from weather events, including windstorms, is already increasing,” the report said. “The average amount paid for extreme weather events, including windstorms, by insurers between 1980 and 1989 totaled $15 billion a year. Between 2010 and 2013, this rose to an average of $70 billion a year.”
Peter Sousounis, director of meteorology at AIR Worldwide, a unit of Verisk Analytics Inc., said that while Sandy was a forecasting challenge, it was not a surprise to catastrophe modelers. However, he said, the storm did offer important lessons.
“We know that hurricanes can interact with adjacent weather systems, and they can alter the symmetry of the wind field,” he said. “That is something we are working on for the next model — to better account for the asymmetry of the wind field.”
Michael Brennan, senior hurricane specialist at the National Hurricane Center in Miami, said storm-tracking capabilities have improved since Sandy struck in 2012.
“We actually have the ability to put up and keep up hurricane watches and warnings or tropical storm watches and warnings for an event like Sandy, because Sandy was transitioning away from a hurricane to an extratropical cyclone as it approached the Atlantic coast, and because of that we didn’t have hurricane warnings up,” he said. “But we now have that capability to keep them up through the life cycle of the storm, to keep the messaging more consistent and try to maintain that level of service even if a hurricane like Sandy happened again.”
Mr. Brennan said that this year the center has separate warnings for storm surges.
“In the past,” he said, “the hurricane warning encompassed the wind threat and the surge threat, but they don’t always line up together. You can have storm surge happen outside of areas that receive hurricane-force winds. We have storm surge warning for areas where there’s going to be the danger of life-threatening inundation from storm surge because the response is different.”
Preparation is vital for businesses in hurricane-prone areas, analysts said. Among other things, Mr. Higgins suggested installing such features as emergency generators and floodgates and flood doors. He also advised developing a formal written hurricane preparedness plan.
“A lot of the work has to be done upfront prior to it ever hitting, in order to really see an opportunity to mitigate the losses,” he said.
“You need to have your plan in place before the storm arrives,” Mr. Brennan said. “You don’t want to be making your plan when you’re two days out in a hurricane watch or a storm surge watch, because then you’re not going to have the time to think through everything you need.”
Many businesses in the hurricane-prone U.S. Southeast or earthquake-prone West Coast have factored resilience to natural catastrophes into their businesses for years, but it took Hurricane Irene in 2011 and Superstorm Sandy in 2012 to open eyes to the need to withstand a disaster in the Northeast.