With more frequent intense floods predicted for the future, residents in western US states need to consider flood insurance, urges Moody’s, as it highlights the region’s low flood insurance penetration rates in a recent report.
According to the report, this low percentage of insurance penetration has left residents in California and the western US states facing “significant risk of financial devastation and long-term economic setbacks” following record rainfall due to Tropical Storm Hilary.
California and the dry desert states of Arizona and Nevada are used to breaking temperature records. In July, Phoenix set a record for the most consecutive days of high temperatures of 110 degrees Fahrenheit (about 43.3 degrees Celsius) or higher, with a total of 31 days.
Later, on August 20 and 21, the states experienced record-breaking rainfall as a result of Tropical Storm Hilary, the first tropical storm to hit southern California in 84 years.
According to the National Weather Service, certain regions in California saw their wettest August day on record. The rainfall totals in this area were equivalent to 50% of its average annual rainfall which resulted in widespread street-level flooding, Moody’s noted.
Further on from California, the Weather Prediction Center stated that Hilary could be one of, if not the wettest known tropical cyclone, post-tropical cyclone, or tropical cyclone remnant to impact Nevada, Idaho, and Oregon.
Widespread flash floods are driving the impacts, exacerbated by the region’s arid soil’s inability to absorb such extreme rainfall intensities. River overtopping was minor but is unfolding as rainfall runoff moves through mountainous watersheds and downstream rivers.
The ageing drainage infrastructure, initially designed under the assumption of climate stationarity, lacks the capacity to manage the intensity of these extreme rainfall events, which significantly contributed to the impacts.
There were nearly 50,000 power outages, and many business interruptions, with mud and debris flows resulting from the widespread floods.
The aftermath of this event, alongside the low flood insurance penetration in the region, have left residents and businesses facing significant risk of financial devastation and long-term economic setbacks.
“Residential exposure in areas with the highest impacts from flooding sees single-digit flood insurance penetration rates for both the National Flood Insurance Program (NFIP) and private policies,” Moody’s explains.
“For certain counties, residential flood insurance penetration is less than one percent. For commercial and industrial exposures, flood insurance penetration rates are more varied and typically higher.”
California saw a wet start to the year due to continued rainfall from a series of atmospheric rivers, a situation that can be attributed and made more likely due to climate change factors, analysts stated.
Noting that tropical cyclones such as Hilary impacting the western US states at this level, are very rare. Despite this, Moody’s warns that residents in the region need to prepare for more frequent intense flood events and to consider flood insurance with their homeowner policies – in addition to wildfire and earthquakes.
Although, it needs to be taken into account that some policies typically do not cover damages due to flooding/mudslides if originally caused by wildfires.
