HURRICANE SANDY RESPONSE AND AFTERMATH - The New Reality of Natural Hazard Risk

Page 1

Recording of this session via any media type is strictly prohibited.

HURRICANE SANDY RESPONSE AND AFTERMATH- The New Reality of Natural Hazard Risk

April 29, 2014

Savita Goel, WDP & AssociatesHeather Roiter Damiano, NYC Office of Emergency ManagementDavid F Smith, EQECATDamian Wach, Prudential Mortgage Capital Company

Page 2


• Assess how natural hazards and their threat to your organization

have changed.• Lessons learned from the vantage point of key players in post-

event response • Incorporate your peers’ life-lesson adjustments into your own

natural disaster response program

LEARNING OBJECTIVES

April 29, 2014

Page 3


• Introduction to Speakers • Hurricane Sandy and CAT Modelling• Overview of NYC Infrastructure• Key Characteristics and Vulnerabilities• Aftermath of Hurricane Sandy• Challenges with Planning Post-Sandy • Risk Manager’s outlook• Discussion on Lessons Learned• Q&A

OUTLINE

April 29, 2014

Page 4


Introduction to Speakers - Savita Goel, WDP- David Smith, EQECAT- Heather Roiter, NYC OEM- Damian Wach, Prudential

INTRODUCTIONS

Page 5


Superstorm Sandy - Highlights• Cat 1 (80 mph 1-minute) at Atlantic City, NJ landfall• Very broad windfield

o ~1000 mile diameter of tropical storm force windso Rmax significantly larger than 1938 stormo ~$ 20 trillion in insurable assets in affected states

• Very low pressure (948 mb recorded at Atlantic City)• Surge heights:

o ~14 feet in lower Manhattan: extremeo ~9 feet at Atlantic City: not as exceptional but still very damaging in portions of the NJ

coast

• Rainfall amounts and rates ~ lower than Ireneo Much less inland flooding

Page 6


Superstorm SandySuperstorm Sandy Track

Historic Tracks1903 was only event that directly struck NJ coast (Cat 1, transitioning)

Page 7


Modeled landfall frequencies (long term):• Virginia – Maine ~ 1 / 8 years• New York ~ 1 / 20 years• New Jersey ~ 1 / 180 years

Page 8


Boston

New York

Philadelphia

Washington

Baltimore Atlantic City

Sandy-2012

1938 Long

Island Express

Irene

-201

1

Storm Name

Intensity (mph)

Rmax (km)

Forward Speed

(km/hr)

1938 98 95 65

Irene (NJ) 65 74 29

Sandy 80 110 37

Page 9


Reported• Atlantic City, NJ - 77 mph • Cape May, NJ - 73 mph• Clifton, NJ - 80 mph• Coney Island, NY - 69• Dennisville (Near Cape May) - 81 mph• Greenwich, CT - 70 mph• Islip Airport , NY- 90 mph• JFK Airport , NY– 79 mph• Montclair, NJ - 88 mph• New Haven, CT - 85 mph• Newark Airport, NJ - 78 mph• Ocean City, NJ - 60 mph• Sandy Hook, NJ - 87 mph (it is a buoy)• Sandy Hook, NJ (onshore) - 81 mph• Surf City (Ocean County), NJ - 89 mph• Tompkinsville, NY – 90 mph• White Plains Airport, NY – 72 mph

Philadelphia

Baltimore

Washington

New York

Boston

77

7360

72

807285

78

70

90

87

89

90

Page 10


Surge - Enhancing Factors

• Higher Winds

• Lower Pressure

• Faster Translation Speed

• Perpendicular Landfall

• Wider Storm - More Area Affected

• Shallow Offshore Slope

• Confining Coastline Geometry

• Peak Surge occurring at High Tide

• Higher Astronomical Tide (Full/New Moon)

Factors enhancing Sandy’s Surge at Landfall

Page 11


Surge – Coastline GeometryNY Bight:

The “corner” where NJ and NY meet at approximately 90º.

Sandy’s track allowed for a long duration of winds directing water into Raritan Bay and NY Harbor.

L

Water can be funneled into the corner and pile up with nowhere to go but up.

Page 12


Battery Park NYC – Storm Tide

Storm Surge

Normal Tide

Resulting Storm Tide

Page 13


Superstorm Sandy – Loss Estimates

NJ

30%

NY 34%

PA

20%

Others 16%

Residen-tial 60%

Com-mer-

cial40%

Losses By State

Losses By Line of Business

• The estimated economic loss for this event is about $30 to $50 Billion

• Based on the event footprint and EQECAT IED, the post-landfall (Nov. 1, 2012) insured loss estimate for Sandy is approximately $10 to $20 Billion (Later revised to $15-$20 Billion)

• Latest PCS: $18.75 Billion• ~1-in-10 for U.S.• ~1-in-70 for Northeast (VA-

ME)

Page 14


Residential flood insurance take up rates in New York in 2010 with Sandy storm surge estimates

Source: Resources for the Future, with data from FEMA

Page 15


Residential flood insurance take up rates in New Jersey in 2010 with Sandy storm surge estimates

Source: Resources for the Future, with data from FEMA

Page 16


Flood Damage• The National Flood Insurance Program (NFIP) reports that for

a 1-story building, the average cost to replace by flooding height is:

1 foot - 22% 2 feet - 32% 6 feet - 58%8 feet - 68%

• NFIP reports that 25 to 30 percent of all paid losses were for damage in areas not officially designated at the time of loss as special flood hazard areas. (NFIP coverage is available outside high-risk zones at a lower premium.)

Page 17


Hurricane / Named StormDeductibles (1)• Special hurricane deductibles had been introduced in 10 of

the states affected by this event (DE, MA, MD, ME, NC, NY, RI, SC, VA), increasing the portion of hurricane damage that is the responsibility of policy holders.

• Hurricane deductibles are separate thresholds that damage must exceed before insurers will indemnify losses. Hurricane deductibles of from 1% to 5% of the structure replacement value are not uncommon. Some hurricane deductibles have Cat 2 or 3 thresholds.

• Insurance Commissioners and Governors were quick to instruct companies not to apply these deductibles.

Page 18


Hurricane / Named StormDeductibles (2)• Sandy was downgraded to a post-tropical storm system just

before it made landfall in New Jersey. • Sandy was not treated as a Hurricane for Insurance Purposes.

The Regulators did not overrule the Hurricane Deductible elements in the contracts but rather chose to enforce the Meteorological Assessment that Sandy had ceased to be a Hurricane before landfall.

Page 19


Wind vs. Flood - Policy StructuresQuantifying the risk for policies with distinct insurance conditions for different sub-perils (e.g. wind limit and flood sub-limit) requires:

• financial modeling that explicitly addresses such conditions• exposure data representation that explicitly addresses such conditions

Page 20


NYC INFRASTRUCTURE OVERVIEW

Key Features of Infrastructure

- Coastal development- Development in 100-yr flood plain - Utilities infrastructure is

underground – Power, Water, Wastewater

- Transportation - Underground subways and the supporting infrastructure

Page 21


INFRASTRUCTURE OVERVIEW – Coastal Development

In 1940Population – 7.5 millionBuildings – Lot less than a million

In 2013 (within 100-year Flood Plain)Population – ~5% of 8.2 millionBuildings – ~7% of a million

Lower Manhattan in 1940’s Lower Manhattan Now

Page 22


INFRASTRUCTURE

Utilities – An Underground City

- Power lines: 70% of 130,000 miles of transmission & distribution underground

- Steam: 105 miles underground pipelines- Gas: 65% of heating and fuels 98% of

electricity production- Water: 7000 miles of buried water mains

and pipes

Page 23


INFRASTRUCTURE

- Transformers vaults with access from sidewalk

- Grating Covers

Page 24


INFRASTRUCTURE

Transportation

- Roadway: 6000 miles - Inter-borough

connection: Bridges & Tunnels

Page 25


INFRASTRUCTURE

Transportation

- Subways: Approx 5.3 million daily rides and approx. 850,000 daily commuter rides into and within NYC

Page 26


BUILDINGS INFRASTRUCTURE

Key Features

- Buildings with basement (sometimes multiple levels below grade)

- PoE of utilities located below grade- Server rooms/ control room located in

basement- Sidewalk vault with grating for

ventilation- Emergency power:

- Fuel tanks located in basement- Emergency Generators higher up

Page 27


CONSTRUCTION TYPES

- Brownstone - High-rise

Page 28


KEY ATTRIBUTES

Older Buildings

- Smaller windows- Heavy Exterior Walls -

Masonry or stone veneer - More redundancies in design- Ballast roof- Rooftop equipment unanchored- Water tank

Page 29


KEY VULNERABILITIES

Older Buildings - Ballast roof- Rooftop equipment

Page 30


KEY VULNERABILITIES

Older Buildings - Rooftop equipment unanchored- Water tank

Page 31


KEY ATTRIBUTES/ VULNERABILITIES

Newer Buildings - Structural System – less

redundancies- Large Size Windows - Vulnerable Façade System

Page 32


DAMAGE FROM HURRICANE SANDY

Flooding

Page 33



Lower Manhattan in Dark in Aftermath of Hurricane Sandy

Page 34



Subway Tunnel Flooded

Page 35



Buildings – High Rise

- Flooding - Minimal to no structural

damage- Disruption led cash flow

losses

Page 36



Buildings – Single Family Homes- Flooding - Structural damage and/or

fallen tree

Page 37


Upcoming Code Upgrades Following Lessons Learned

Flood Maps - New FIRMs - Buildings in 100-yr flood zone are mandated to have flood

protection plan in place

Building Codes- Upgraded NYC Building Code in Oct. 2014

Page 38


Page 38

Challenges with Planning Post-Sandy

Heather Roiter DamianoDirector of Hazard Mitigation

NYC Office of Emergency Management

Page 39


NYC Coastal Storm Plan“Largest and most operational CSP in the country.”

Page 40


CONFIDENTIAL

The Story of Sandy

Page 41


CONFIDENTIAL

Different Parts of the City Faced Different Types of Flood Hazard

Surge and Wave ActionAtlantic Coast shorelines faced inundation plus impact wave action Structures are primarily low-rise

residential

Severe structural damage concentrated in areas directly facing shoreline

Stillwater FloodingUpper Harbor and other areas to the north generally experienced inundation only Damage primarily to mechanical,

electrical, and telecommunication systems and building contents

Stillwater FloodingSurge and Wave Action

Upper Harbor

Atlantic Coast

DOB Tagging by Flood Type and Geography

Page 42


CONFIDENTIAL

PlaNYC: A Stronger, More Resilient New York

Mayor Bloomberg released 6/11Offers a roadmap to protect the city against

climate hazards and sea level riseSets City’s priorities and strategies for long-

term resiliencyCommunity Recovery

• Lower Manhattan ; Brooklyn/Queens Waterfront; Southern Brooklyn; South Queens; Mid/South Staten Island

Infrastructure and Built Environment250 specific recommendations

nyc.gov/resiliency

Coastal protectionBuildingsInsuranceUtilitiesLiquid FuelsCommunity PreparednessHealthcare FacilitiesTelecom

TransportationParksWastewater and water

Page 43


Based on the SLOSH* model

A worst-case scenario model that is used for evacuation purposes

A combination of hurricane modeling and evacuation route analysis to produce Zones 1 through 6.

Recently updated (August 2013) to provide more flexibility in evacuation options and reduce confusion with FEMA FIRMs

*SLOSH stands for Sea, Lake, and Overland Surges from Hurricanes

OEM’s Hurricane Evacuation Map

Page 44


Key functions: Basis for understanding

current flood risk (coastal and riverine)

Inform building code standards

Determine flood insurance requirements

NYC’s first FIRMs were issued in 1983

FEMA currently updating NYC’s maps

FEMA’s Flood Insurance Rate Maps (FIRMs)FEMA’s flood maps are developed as part of the National Flood Insurance Program.

Page 45


Flood Insurance Rate MapsFEMA’s FIRMs designate flood zones based on different types of hazards.

The Base Flood Elevation (BFE) is the height to which the flood waters are expected to rise.

Page 46


NFIP Challenges • Pre-Sandy, NFIP was $18B

in debt to Treasury ($16B from Katrina)

• Expected Sandy payouts are $12-15B

• Subsidized rates do not adequately reflect actual flood risk

July 2012: Biggert-Waters Flood Insurance Reform Act

• Prohibit premium subsidies on new or lapsed policies

• Phase out subsidies for all policies

• Require banks to enforce purchase requirements more vigorously

• Analyze affordability impacts by April 2013

National Flood Insurance Program ReformThe NFIP has undergone significant regulatory change over the last 18 months.

March 2014: Homeowner Flood Insurance Affordability Act

• Repeals trigger for new or lapsed policies

• Caps rate increases at 18% annually (some exceptions)

• Enables newly mapped properties to purchase preferred risk rate for 1 year

• Authorizes additional funds for affordability study

• Provides refunds for certain policies affected by BW-12

Page 47


CONFIDENTIAL

Damage outside 1983 100-year floodplain:

• > 1/3 of red- and yellow-tagged buildings

• ~ 1/2 of impacted residential units

• > 1/2 of impacted buildings

Flood Insurance Rate MapsSandy demonstrated that New York was more vulnerable than previously thought.

FEMA 1983 FIRMs 100-year Floodplain

Sandy Inundation Area (outside the 100-year Floodplain)

Source: FEMA (MOTF 11/6 Hindcast surge extent)

FEMA 1983 FIRMs vs. Sandy Inundation Area

Page 48


CONFIDENTIAL

100-year Floodplain*

1983 FIRMs

2013 PFIRMs

Change (%)

Residents 218,000 398,000 82%

Jobs 214,000 271,000 27%

Buildings 36,000 68,000 89%

1-4 Family 26,000 53,000 104%

Floor Area (Sq Ft.) 377M 534M 42%

* Numbers are rounded for clarity

Flood Insurance Rate MapsThe most recent maps, called Preliminary FIRMs, were released in December 2013 and

show a floodplain that is 51% larger than previously.

Source: FEMA

FEMA 2013 Preliminary FIRMs 100-year Floodplain

FEMA 1983 FIRMs 100-year Floodplain

FEMA 1983 FIRMs vs. Preliminary FIRMs

Page 49


CONFIDENTIAL

* Numbers are rounded for clarity

Flood Insurance Rate MapsGiven the City’s projections on sea level rise, these floodplains will extend even further by

the 2020s and into the 2050s.

FEMA 2013 Preliminary FIRMs 100-year Floodplain

Projected 2020s 100-year Floodplain

Projected 2050s 100-year Floodplain

Source: FEMASource: FEMA; CUNY Institute for Sustainable Cities

Projected floodplain for the 2020s and 2050s

100-year Floodplain*

2013 PFIRMs

2050s Projected

Change (%)

Residents 398,000 801,000 82%

Jobs 271,000 430,000 27%

Buildings 68,000 114,000 89%

1-4 Family 53,000 84,000 104%

Floor Area (Sq Ft.) 534M 855M 42%

Page 50


CONFIDENTIAL

Attached 1-2 FamilyRed Hook, Brooklyn Uninsured Pre-FIRM in 100-year floodplain

• Lowest floor relative to BFE: -5• Has a basement NA $4,100

CurrentScenario New

Detached 1-2 FamilyGerritsen Beach, Brooklyn Newly mapped Pre-FIRM in 100-year floodplain

• Lowest floor relative to BFE (new): -9• Has a basement $429 $8,045

Detached 1-2 FamilyMidland Beach, Staten Island

Existing Post-FIRM in 100-year floodplain• Increase in BFE: 4• Lowest floor relative to BFE (new): -1

$506 $2,365

Annual Premiums

Existing Pre-FIRM multistory• Lowest floor relative to BFE (new): -9• Has a basement

unknownMultistory

Affordability ChallengesThe analysis shows that pre- and post-FIRM annual premium increases will be significant due to the implementation of BW-12 and the FIRM update…

Page 51


Reduce risk • City’s $19.5 Billion plan lays out 257 initiatives to strengthen coastal defenses, improve

buildings, protect infrastructure and make neighborhoods safer and more vibrant

Improve risk-based pricing:• Neighborhood: Army Corps and FEMA do not always agree on flood protection benefits• Household: 40% of City’s buildings cannot be elevated; exploring alternative mitigation

strategies• “Pre-FIRM” construction: Need updated rate-setting methodology for old building stock

(focus of the Negatively-Rated Building Study being conducted by the National Academy)

Explore data collection options and launch affordability study• Working with FEMA and Google on low-cost approaches to gathering elevation data• Launching a 10-month study to assess affordability impacts and potential solutions

Inform the public: • Launching public education campaign regarding risks, mitigation and flood coverage

1

2

3

4

City Efforts and Next Steps: Flood InsuranceCity is taking steps to reduce risk and increase understanding of its exposure.

Page 52


CONFIDENTIAL

The City Council introduced over 20 bills to address resiliency in 2013

Flood-resistant construction for hospitals and nursing homes

Communicating risk and emergency plans Fuel storage in flood zone

Building Resiliency Task Force: 33 proposals

Proposed changes to codes Best practices/guidelines for emergency planning

and response

A Stronger, More Resilient New York recommends retroactive requirements for existing large buildings and for hospitals

Enhance protection of mechanical equipment Avoid long-term operational losses in a future

flood event

City Efforts and Next Steps: Codes and Standards

Page 53


Property Risk Management with Insurance

Property value may decrease due to unforeseen financial or physical loss (ie flooding).

Catastrophic damage is of particular concern to risk managers due to severity of loss – may restructure ownership.

Property insurance is the primary risk mitigate against catastrophic loss of value.

JV Partners

Mezzanine Lender

Junior Lenders

Senior Lenders

Property Value

Conceptual Real Estate Investment Structure

Page 54


Business Interruption

WindstormFloo

dContentsLaw & Ordina

nceTerrorism

Boiler

Basic Property Coverage

• Need for catastrophic coverage (flood, windstorm, earthquake) determined by location and property characteristics.

• National Flood Insurance Program (NFIP) requires flood coverage through mortgage process.

• Need for flood coverage usually determined by current Flood Insurance Rate Maps (FIRMS).

• Windstorm coverage usually included in property policy.

• Need for earthquake insurance usually determined by Seismic Zone or USGS’s PGA charts.

What type and how much property insurance is needed?


Page 55


• Windstorm insurance limits usually equal insurable value (IV); no analysis needed. However, hurricane classification may impact coverage.

• Earthquake limits usually much less than IV; determined by seismic risk or probable maximum loss (PML) analysis.

• Flood limits usually equal NFIP limits.

• residential -$250k plus $100k for contents

• commercial - $500k plus $500k for contents.

• Flood coverage rarely determined by probable maximum loss (PML) analysis.

Property I

nsuran

ce Li

mit

Windsto

rm Su

blimit

Earth

quake S

ublimit

Flood Su

blimit

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Type of Coverage

Prop

erty

Rep

lace

men

t Val

ueProperty Risk Management with Insurance

Page 56


Flood & Windstorm Risk Management in East Coast

• Many properties in US high risk flood areas (Special Flood Hazard Areas – SFHAs) rely exclusively on NFIP flood insurance.

• In many cases, the NFIP limits of $250k for residential and $500k for commercial may be insufficient to cover probable maximum loss.

• In NYC, property characteristics such as location of mechanical equipment, electrical transformer, back-up power generators, etc. historically not considered in determining flood limits.

• Current Flood Insurance Rate Maps (FIRMS) or pending maps should be relied upon to determine flood risk.

• Property management’s ability to manage flood or windstorm restoration also critical in minimizing loss (ie - shortage of restoration contractors, generators, materials after Sandy).

• Best practice: engage a team and develop a detailed risk management plan before the crisis.


Documents

HURRICANE SANDY RESPONSE AND AFTERMATH - The New Reality of Natural Hazard Risk