New Orleans Times-Picayune: Hurricane storm surge risk report points to South Florida damage potential

THis article appeared in The Times-Picayune (New Orleans) on March 31, 2010:

 

By Mark Schleifstein

Five years after Hurricane Katrina devastated the New Orleans region, it may come as a surprise that the metropolitan area with the most to lose from storm surges caused by a catastrophic hurricane is the mega-urban south Florida complex of Miami-Dade, Broward and Palm Beach counties.

A new study of the potential effects of hurricanes on homes in 13 Atlantic and Gulf coast communities found that the storm surge associated with a Category 5 hurricane could damage more than 250,000 homes in southeast Florida at a cost of $53.6 billion, compared with $39.5 billion in residential damage for Virginia Beach, Va., and $33 billion for Tampa, Fla.

The study, released Monday by First American Corp., a company that provides risk information to insurance companies, ranks New Orleans sixth among at-risk coastal communities.

Compared with the Miami area, the study estimates that about 91,000 homes in metro New Orleans could suffer an estimated $17.5 billion in damage if hit by a Category 5 storm. But the study also warns that the assumptions it uses about the region’s recovery in the aftermath of Katrina could have skewed those results.

Hurricane Katrina is estimated to have caused more than $80 billion in residential and other damages in the U.S., including Louisiana, Mississippi, Alabama and south Florida. The vast majority of that damage was the result of storm surges.

“Faced with potential staggering costs and the prospect of continuing global climate changes, insurers began abandoning coastal markets — or have created artificial coastal buffers — in an attempt to exclude properties vulnerable to storm surge,” the First American study said. “The difficulty for insurers is that storm surge cannot be neatly contained by buffers, as some properties within the buffers may have less risk and are insurable.”

Despite the continued focus on the potential for another catastrophic hurricane to hit New Orleans, the study concludes it should come as no surprise that south Florida is most at risk.

The Great Miami Hurricane of 1926, which hit downtown Miami and Miami Beach as a Category 4 storm, still ranks first in terms of damage, at $157 billion, if costs are adjusted for 2005 dollars, according to a 2008 study of hurricane damages by University of Colorado researcher Roger Pielke Jr. and National Hurricane Center senior scientist Christopher Landsea.

Hurricane Andrew, with Category 5 winds and storm surge of 17 feet, hit just south enough of Miami’s downtown area in 1992 to dramatically limit its effect on homes. That said, it still caused $25.5 billion in surge and wind damages in Florida and another $1 billion in south Louisiana. Adjusted to 2005 values in the Pielke-Landsea study, Andrew ranks fourth, at $57.7 billion, in total damages.

Despite its No. 6 ranking for a Category 5 storm, the New Orleans area ranks second in terms of surge damage risk for the weakest type of hurricane. If struck by a Category 1 storm, with sustained winds of 74-95 mph, around 85,000 homes could suffer damages of $16.6 billion. The Miami region again ranks first in terms of risk, with about 55,000 homes at risk of $19.8 billion in damage.

A spokesman for First American warned that the company’s damage estimates for New Orleans are based on surveys of home values a year after Katrina, and thus don’t pick up a vast amount of new and restored homes. The survey also does not reflect the potential reduction in surge effects resulting from improvements already made to the area’s levee system.

Once the Army Corps of Engineers completes its improvements to the levee system to protect from surges caused by hurricanes with a 1 percent chance of occurring, a so-called 100-year storm, the damage estimate could drop dramatically.

First American developed the surge modeling study to assist insurance companies in  determining the risk to properties from storm surge, said spokesman Howard Botts.

Damages caused by hurricane-related flooding often have not been factored into risk assessments used by private insurance companies to set rates or make coverage decisions because damage to homes from storm surge and other flood events are traditionally covered by separate policies issued by the federal National Flood Insurance Program.

But following rulings by federal judges in Mississippi that winds blew down some Gulf Coast homes before surge waters would have destroyed them, First American decided to model coastal metropolitan areas where insurance companies could be at risk from similar rulings, Botts said.

“In the aftermath of Katrina, companies are trying to reduce their risk, including the risk of lawsuits,” Botts said. “The traditional flood modeling used by FEMA doesn’t do an adequate job of looking at storm surge risk.”

He said insurance companies could use the model information to either recommend or require — depending on state law — that homeowners in surge risk areas buy flood insurance before being issued a homeowner’s policy covering wind damage.

The company decided to use the Saffir-Simpson scale of hurricane categories in labeling surge risk because the scale is still the most understandable rating system for the public, Botts said.

The National Hurricane Center now uses the Saffir-Simpson scale only to describe the potential winds caused by the storm, and issues separate forecasts for surge heights for each storm, based on a combination of factors, including wind speeds, the size of the storm, and the topography of the coastline.

Botts said the model used by his company was run to reflect the maximum surge heights possible for each category of storm in each location. They also don’t represent what will happen from a specific storm, but rather the worst case scenario for an entire metropolitan area.

Like modeling used by the Army Corps of Engineers in the aftermath of Katrina to determine the potential for surge in the Gulf of Mexico, the First American program also ran more than a million individual computerized storms to come up with its estimates.

The study also took into account differences in the chance of a hurricane hitting different coastal areas. For instance, it dismissed the possibility that a Category 5 hurricane could hit Long Island, the coastal suburb of New York City, but still found that a worst-case Category 4 could damage 367,773 homes at a cost of $11 billion.

The Long Island modeling in the report included the borough of Brooklyn, which is largely residential. But it did not include Manhattan because the majority of property at ground-level is commercial, rather than residential, Botts said.

Still, separate modeling shows that surge from a worst-case Category 1 hurricane would flood much of lower Manhattan, including Wall Street.

Using the First American database, insurers can look at risk at the street, block or ZIP code level, Botts said.

ZIP code 29464 in the town of Mount Pleasant, S.C., is the most risky in the 13 areas in the study, with a potential $3.6 billion in damage if hit by a Category 5 hurricane with sustained winds of more than 155 mph. The most dangerous ZIP codes in the New Orleans area — 70003 and 70005 in Metairie, each with a potential $2.3 billion in residential property damage — rank 14th and 15th among those in the study.

Officials in Mount Pleasant aren’t too happy about their ranking in the new study. While the town’s highest point is about 30 feet above sea level, most of the residential area is just across Charleston Harbor from the main city, with marshland and barrier islands separating it from the Atlantic.

Hit by Hurricane Hugo in 1989, the community has adopted stringent building codes that require homes in FEMA velocity zones — at risk of surges — to be built a foot above required elevations.

“We don’t allow solid wall enclosures below the buildings,” said Rob Rogerson, the town’s flood plain manager. “Just open foundations with breakaway panels, either louvers or lattice panels.

“We don’t relish being called the No. 1 risk area, but these houses are engineered with lots of hold-down straps and other features to withstand the winds,” he said.

 

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