Over a decade ago, there were several claims that “snowfalls are now just a thing of the past.” Even as recently as February of last year, The New York Times published an article titled “The End of Snow.” These commentaries predicted that snow would soon be a distant memory, and our children and grandchildren would never see it, except in photographs. These claims may alarm people, but the data suggests otherwise, particularly along the East Coast of the United States.
One of the most common methods to examine the impact of a winter storm is NOAA’s National Climatic Data Center Regional Snowfall Index (RSI), which uses the area of snowfall, the amounts of snowfall and the number of people living in the snowfall area to quantify the societal impact of a snowstorm. In the Northeast, the RSI is also known as the Northeast Snowfall Impact Scale (NESIS), and the values are both a raw index value and a categorical value from 0 through 5, much like the Saffir-Simpson Hurricane Scale or Fujita Tornado Scale (i.e., the more snow that falls over a large populated area, the greater the impact on a population and the larger the number.) This data shows that, over the last decade, there has been a trend toward an increase in high-impact snowstorms along the East Coast.
The New York City metropolitan area has the largest population in the U.S., and this area has experienced five of the top 10 snowfalls on record dating back to 1869. However, not all large East Coast snowstorms result in large insured losses. For example, New York City’s biggest snowfall occurred on February 11 and 12 of 2006, dumping a total of 26.9 inches. Yet this event was never declared a PCS event (insured losses over $25 million). Long Island’s biggest snowstorm in history was the result of a Nor’easter on February 8, 2013 that dropped 33.5 inches of snow in Medford, NY, but this storm did not receive a PCS designation either. Of the 84 documented NESIS events since 1960, 34 have been a Category 3 (Major), 4 (Crippling) or 5 (Extreme), but only 50% have resulted in PCS losses. The extent of the losses from the latest snowstorms that have impacted the Northeast, which were preliminarily rated between a Category 2 (Significant) and 3 on the NESIS scale, have yet to be determined. However, we do know that winter losses are a growing area of concern for the insurance industry due to the fact that, typically, the first quarter is a stable period with little catastrophe loss.
There appears to be a continued lack of understanding around winter storm losses, which is why I am speaking on the subject at the RAA Cat Risk Management Conference in Orlando, FL. In this presentation, I will dive deeper into the topic and provide insight into the trends and hidden issues that often result when winter storm losses fall below the retention of a normal catastrophe program. Some of these same issues might emerge due to the latest Nor’easter/blizzard of January 26 – 27, which presented cases for business interruption insurance, CBI coverage loss, and insured loss around ingress/egress and civil authority actions due to shutdowns.