One of the long-term consequences of Hurricane Katrina in 2005 for residential insurance companies was a new concern for the potential destructive force of storm surge, a natural phenomenon not covered in traditional homeowners insurance policies.
Dr. Howard Botts, vice president and director of development for First American Spatial Solutions (FASS) was quoted in an April 30, 2010 article by Stephanie K. Jones for the Insurance Journal entitled, “Beyond the Flood Zone: Storm Surge Multiplies Coastal Vulnerabilities.”
FASS developed a model to demonstrate the physical and financial destructiveness of storm surge. “Homeowners can mitigate against wind damage, but they’re powerless, really, to do anything against storm surge,” said Botts.
According to the FASS findings, storm surge is “such a large scale phenomenon that doesn’t really respect construction and other kinds of things. If you’re in a storm surge zone, you’re likely to be impacted by it,” he said.
In 2008, when Hurricane Ike made ground near Galveston, Texas the damage caused by the storm’s massive surge helped to make Ike the third most costly hurricane on record in the United States.
According to scenarios included in the 2010 First American Storm Surge Report released in March, a Categroy 5 hurricane in Miami would lead to storm surge damage of as much as $53.6 billion.
The detailed data in the report will help insurers to build better risk profiles for areas that could be hit hard by storm surge, hopefully leading to a greater awareness of the need for homeowners in such regions to carry flood insurance.