Two weeks ago, Hurricane Arthur made landfall along the North Carolina Outer Banks. Arthur was the strongest hurricane to make U.S. landfall since Hurricane Ike in 2008 and was just 13 mph shy of ending the U.S. major hurricane drought. However, the overall impact of Hurricane Arthur was diminished due to the strongest winds being on the right side of the storm as it crossed eastern North Carolina, as discussed in my previous blog post, resulting in less overall damage. While damage was reported, and up to six feet of storm surge was observed in parts of the Outer Banks, most damage seemed to be flood-related and will be picked up by the NFIP, resulting in a loss level that falls below PCS CAT designation guidelines. This is notable for several reasons.
When reviewing the extensive PCS records of both U.S. hurricane landfall and hurricane loss, Hurricane Arthur is the second Category 2 hurricane to make landfall and not have a PCS designation. The only other storm in which this situation occurred was Hurricane Gerda, which made landfall in the extreme northeast portion of Maine in 1969, making the lack of designation understandable given the limited exposure across this region. However, according to Corelogic, there are an estimated 23,215 residential properties in Kill Devil Hills and Morehead City, NC where Arthur made landfall, with a total replacement cost of $4.7 billion. Based on Verisk Climate Respond weather data found in the BMS iVision Historical Events Library and using the unique PCS shapefile for Arthur, it is remarkable that a Category 2 hurricane in this area that had three-second wind gusts over 70 mph would not cause a PCS loss of at least $25 million. Particularly since there have been previous storms that have taken similar tracks and caused PCS-designated losses in the past.
Although each named storm has special attributes that may cause insured loss, the general characteristics that drive loss are similar. However, as the image below illustrates, there were five hurricanes that occurred between 1955 and 2012 that tracked within 30 miles of Arthur’s path across North Carolina’s Outer Banks. These five storms all produced PCS losses, even though they had similar or weaker storm strengths than Arthur at landfall.
More significantly, when looking at the past named storms from 1955 to 2012, 35 have caused PCS losses in North Carolina, with many of the named storms making impact at or below a Category 2, and several storms tracking hundreds of miles away from North Carolina, such as Hurricane Sandy (2012), which tracked 273 miles east of the Outer Banks. Click here for a linked table to these storms, which can be reviewed using NOAA’s Historical Hurricane Tracks tool. The image below provides a view of four of the named storms that caused PCS losses in North Carolina.
The examples above illustrate that North Carolina’s Outer Banks are no stranger to named storm activity, with the expected landfall return period for this area being five years, and major hurricane return period being 16 years, according to the National Hurricane Center. This has allowed the Outer Banks to better prepare for future named storm losses. The good news is that after years of storms, a Category 2 hurricane making U.S. landfall and having minimal impact demonstrates that insurance companies are becoming more risk-averse and policyholders are either constructing or reconstructing buildings at standards that reduce loss. One can only hope that future hurricanes making landfall along the U.S. coast will produce similar results.