* Getting smarter in terms of gauging risk exposure
* The right data can help avoid potential risk
MIAMI, March 29 With another Atlantic hurricane
season just two months away, a new report on Monday highlighted
the risk of flooding and storm surge to homeowners in many U.S.
Residential properties in the Miami area alone, considered
a prime target, could sustain more than $50 billion in flood
damage in a future mega-storm, according to the report issued
by First American Corp (FAF.N), a company heavily involved in
the U.S. insurance industry.
It listed 12 other coastal regions where single-family
residences are vulnerable to major losses due to
hurricane-driven floods, ranging from Texas in the south to
Virginia and the Long Island area of New York.
A maximum strength Category 5 hurricane striking the
Virginia Beach area at the mouth of Chesapeake Bay could cause
over $39 billion worth of residential damage, the report said.
Anyone who followed Hurricane Katrina, which swamped New
Orleans in 2005 and became the costliest natural disaster in
U.S. history with damages estimated at $80 billion, knows the
dangers from flooding in big coastal cities.
But the population on the Atlantic and Gulf coasts jumped
to 86.3 million in 2006 from 66.8 million in 1980, according to
the U.S. Census Bureau. And no one sees hurricanes or even
sea-level rise reversing that trend anytime soon.
For that reason Howard Botts, a veteran geographer who
heads database development at First American, said homeowners,
property developers, insurers and public policy makers need to
get much smarter when it comes to gauging risk exposure.
Comprehensive storm-surge models such as the one developed
by First American, which served as the basis for Monday's
report, can go along way toward making that happen, Botts
Based on a variety of sources, including its own database
of 123 million property or parcel boundaries, he said First
American's coastal storm surge model was at the cutting edge of
"We now have much better elevation data. We have much
better individual property information. We have much higher
resolution air photo and satellite photography and all of that
has allowed us to look at things at an individual level," Botts
He noted that some insurance companies had either
considered or moved openly to stop offering homeowner policies
in places such as Florida because of hurricane risk.
But with 53 percent of the U.S. population already living
in coastal counties, insurers interested in building market
share and a national presence clearly need to be able to write
policies in risky regions, he said.
One of the key issues, in addition to taking individual
property characteristics into account, is recognizing
mitigating factors in low-lying areas such as sea walls and
"Companies are trying to get a competitive advantage," said
"If they can identify properties that are of lower risk
there's money to be made in these markets and I think they're
realizing that, with the right data, you can avoid a lot of the
"We hear a lot of companies talking about it. They're now
looking at Florida and other Gulf coastal markets in particular
as opportunities rather than areas to avoid."
(Reporting by Tom Brown; editing by Andre Grenon)