If you have been living under a rock the last few days, you might not know that the first big nor’easter of the 2015/2016 winter season is expected to hit the East Coast of the U.S. this weekend. This storm summary will focus on the insured impacts of and provide a historical context for this intensely forecasted event. However, it should be noted that much uncertainty accompanies the forecasts, so predicted impacts could change as the storm develops over the next two days.
The media hyp-o-meter around this storm is at an all-time high due to the fact that there is good agreement among all the various models we use that a big nor’easter is going to happen, and some of its impacts will be major or even record breaking.
— Bill Clark (@billclarkphotos) January 21, 2016
Collapse from weight of snow
The biggest question that everyone wants answered is how much snow is going to fall. No one can accurately answer that question today, unfortunately. What we do know is that a number of factors will contribute to a high-moisture storm. In other words, there will be a lot of snow. It’s just not possible at this point to say where the most of the snow will fall – but plenty of forecasters are trying! I highly suggest following the local National Weather Services office for the most accurate snowfall forecasts.
So far, the storm has slowly trended south on the weather models. Additionally, it has a very sharp temperature moisture gradient on the north side. Due to the uncertainties on the northern fringe of this storm, there’s going to be a razor thin margin between major snow and conversational snow. However, due to the lack of existing snow pack, collapse due to weight of snow at this point in the season is unlikely to cause insured losses to buildings with standard structural integrity.
Of course the first significant snowfall of the year also means drivers must adapt to slippery conditions which will result in accidents and higher auto related losses. Finally, the snow, ice and wind from this storm could also cause prolonged power outage which could results in insured losses.
Wind and flood risks
Despite the fact that most of the media coverage is focused on snowfall, potentially destructive wind and coastal flooding often go unreported. This storm is big and slow, and due to the tight pressure gradient, as the storm strengthens off the east coast, it will allow for a strong on-shore flow, which could cause damaging wind gusts and storm surge along the coast. Winds and flooding could cause serious issues for the insurance industry. Depending on its ultimate track, this storm has the potential to become one of the top 5-10 coastal flooding events for folks from the Jersey Shore into Virginia.
To illustrate the threat posed by this storm, consider that an 8.5 foot tide level would rank in the top 8 tide levels of all time at Cape May, New Jersey. As illustrated by the chart below, the Extratropical water Level Guidance from the National Weather Service, highlights the wind/flood risk associated with storm surge guidance for various cities along the coast. For Cape May, NJ, you’ll see the highest tide cycle for this storm ends up at a water level of about 8.5-8.7 feet.
For historical comparison in the same location, consider that Sandy produced a tide level of 8.9 feet, an October, 2011, storm produced a tide level of 8.7 feet, and a December, 1992, storm produced a tide level of 8.6 feet.
Insured property along the coast or back bays of New Jersey, Delmarva, and Virginia, are likely to be the most impacted as the storm has the possibility of lasting 2-3 high tide cycles. If the storm track shifts a bit or the intensity changes, we could see these values change. It’s a fluid but serious forecast for the insurance industry: the coast is where the highest winds will hit, and those winds may gust as high as those of a tropical storm. Speaking of winds, expect severe storms to produce wind damage and possibly an isolated tornado across the state of Florida.
Insured Loss Analogs
Historically, the East Coast is no stranger to large nor’easters. In fact, last year’s large snow event and winter time insured losses should be fresh in the insurance industry’s mind given the record breaking snowfall over New England and one of the costliest winters ever for the industry.
On average over a 56-year period, 1.3 nor’easter occur every year, and 2.3 large snow storm events occur as defined by the Northeast Snowfall Impact Scale (NESIS). In the last ten years, these non-inflation adjusted event level losses have averaged out to cost just over $300M per event.
The table below provides a few analog storms that resemble the forecast guidance for the current storm. Right now, the model guidance does not suggest a repeat of the first Superstorm / “Storm of the Century” (March 12 – 15th of 1993) which still stands as the costliest nor’easter to impact the insurance industry.