Analysis from global property information, analytics and data-enabled service provider, CoreLogic, shows that more than 6.9 million homes along the Atlantic and Gulf coasts are at risk of hurricane storm surge inundation, with a combined reconstruction cost value (RCV) of over $1.6 trillion.
This is according to CoreLogic’s 2018 Storm Surge Report, which reveals that roughly the same number of homes are at risk of hurricane-induced storm surge this year as in 2017.
However, as a result of higher regional construction costs, as well as increased labour and equipment expenses, the 6.9 million homes at risk in 2018 have a higher RCV when compared with 2017, jumping from over $1.5 trillion to more than $1.6 trillion, which represents year-on-year growth of 6.6%.
The analysis examines risk from hurricane storm surge inundation for homes across 19 states, and also for 86 metro areas. CoreLogic explains that homes are categorised by five risk levels, with low being homes only affected by a Category 5 storm and extreme being homes affected by Category 1-5 storms, with moderate, high, and very high sitting in between.
The chart below, provided by CoreLogic, lists the total number of homes at risk by state.
The RCV concerns the cost to completely rebuild a property in the event of damage, and, includes labor and materials by location to then assume a worst-case scenario at 100% destruction.
Dr. Tom Jeffery, senior hazard scientist at CoreLogic, commented: “While industry predictions for this year’s storm season indicate average activity levels, associated storm surge risk remains an important consideration for residential and commercial properties in the 19 states analyzed.
“Depending on the location of a storm’s landfall and that area’s population density and reconstruction costs, lower Category storms can cause just as much damage as storms in higher categories.”
Analysis of CoreLogic’s annual storm surge reports shows that the number of homes at risk of hurricane-induced storm surge along the Atlantic and Gulf coasts continues to rise, as does the RCV. In fact, in just the last three years, the number of homes at risk has increased by roughly 5% while the RCV of these homes has increased by just under 7%, to more than $1.6 trillion.
As a major threat to insurance and reinsurance markets, hurricane-induced storm surge has the potential to be as damaging as wind to the industry, with insured exposures increasing all the time.
The storm surge phenomenon is mostly dependent on the intensity of hurricanes and perhaps more notably the location of the surge occurrence, something highlighted by CoreLogic in its 2018 report.
For example, and by state, New York ranks fifth in the number of homes at risk, but owing to a high density of homes near the coast line and higher construction costs in the state, it ranks second in RCV, with a total cost of more than $190 billion.
Florida tops the list for both the number of homes at risk (over 2.7 million) and the RCV (over $552 billion). The chart below, provided CoreLogic, lists the RCV of at risk homes by state.
*The low risk category refers to Category 5 hurricanes, which are not common along the northeastern Atlantic Coast. States in that region are designated as N/A for this category due to the extremely low probability of a Category 5 storm affecting these areas.
According to the National Oceanic and Atmospheric Administration (NOAA), the 2018 Atlantic hurricane season is predicted to have near-to-above-normal activity, with a 70% chance of 10 to 16 named storms, five to nine of which will develop into hurricanes.
