MIAMI (Reuters) - 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. coastal regions.
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, 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 said.
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 hazard analytics.
“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 told Reuters.
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 berms.
“Companies are trying to get a competitive advantage,” said Botts.
“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 potential risk.
“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