Harvey the Good and Bad News
If there is a bit of good news, it might be that Harvey is pulling in dry air which is giving some reprieve to the heavy rainfall near the center of Harvey. The bad news is that Harvey as forecasted to moving out over the warm water of the Gulf of Mexico which could further enhance convection and increasing the flow of moisture once again over the next few days.
Harvey Current Status and the End Game
Harvey is currently a tropical storm near Port O’Connor, which is about 50 miles from where Harvey initially made landfall on Friday evening as a Category 4 hurricane. Harvey, which is only moving at 3 mph, will slowly head back over the warm Gulf of Mexico. It is at this point that it will likely slowly start its northeastward movement towards a second landfall area between Houston and the Texas / Louisiana border. During this time Harvey will continue to tap moisture from the Gulf of Mexico, but at this point there is very little model support for Harvey to regain hurricane strength. As it moves to the northeast the extensive rain shield will also move to the northeast into Louisiana, which will increase the flood potential for much of the state over the next few days. By Friday this week Harvey will be extra tropical system over Arkansas and the named Harvey will be retired into the history books only to be referenced back to much like Andrew, Katrina and Sandy are today.
The flood situation continues to unfold. I honestly can’t keep track of all the records that have been broken, there are so many. So far as far as I can tell the 48″ rainfall record has not been broken yet, but 35″ rainfall totals have been reported which verify the forecasts made early last week. Some of the most important records are the forecasted river crest in and around the Houston area. For example, Buffalo Bayou that flows into downtown Houston, has already seen record flooding, in some places by 10 ft. The gauge at Point Village suggest it will be at record flood stage for at least five days which is likely due to the Army Crop releasing water from the giant flood retention areas of George Bush Park (Barker Reservoir) and Addicks reservoir and dam just north of the Katy Freeway (1-10). Both of which are Army Corps project to protect Buffalo Bayou and downtown Houston from flooding.
The Army Corp has told some residents their homes could be flooded for up to two months.
It is still too early to get a complete view of what the insured impacts will be from Harvey as the flood situation continues to develop. With the wind and surge loss estimates ranging from $1 to $3 Billion in insured losses the flood losses will highly depend on what the commercial and energy sectors sustain from the flooding. There could likely be high content and BI losses within these sectors. The general view is personal line home owner risk is largely not covered and falls on the NFIP. However, if past events are used severe flooding can take its toll on to the auto segment of the industry. A bit unknown is some private-sector insurers have started to sell stand-alone flood coverage to homeowners, but it is unclear what the market penetration is at this point.
Economically Harvey will likely be one of the largest natural disasters in U.S History. There is talk that it could rival Katrina and given that Houston is the 4th largest city in the U.S. there is clearly more economic potential to be damaged.
Other Tropical Troubles
Currently Potential Tropical Cyclone #10 is off the Georgia/South Carolina border and has a 90% chance of becoming a tropical depression or named storm Irma over the next 48 hours. The overall impact to the insurance industry should be minimal as the Outer Banks would be the only area to experience tropical storm force conditions as it races out over the north Atlantic this week.
The next area of tropical trouble is off Africa this weekend and is currently south of the Cape Verde Islands. This system is looking healthy and unlike many of the other African waves the dry dusty air currently is not a factor. I expect that a depression could form later this week.
The long-range models take this system across the Atlantic over the next 10 days. The general consensus is that it would follow a track similar to Garet and approach the East Coast of the U.S. However, as stated many times this season as tropical systems get closer to the U.S. overall conditions get better for strengthening.