According to the Insurance Council of Texas, only about 20% of homeowners have flood insurance, almost all of which is through the National Flood Insurance Program (NFIP) run by FEMA. The NFIP is already nearly USD 25 billion in debt. Harvey may well push the NFIP up against its borrowing limit of USD 30 billion and prompt action by lawmakers to reform the program, which is due to be reauthorized at the end of September. In Harris County alone—home to Houston—the NFIP holds more than 240,000 policies, representing more than USD 60 billion in coverage.
Hurricane Harvey's Category 4 wind speeds brought devastation to the city of Rockport, Texas (est. pop. 10,650), and surrounding towns when the storm made landfall at approximately 10:00 p.m. CDT on Friday, August 25. According to the National Hurricane Center (NHC), winds at landfall were approximately 130 mph, with hurricane-force winds extending 40 miles from the center and tropical storm-force winds extending 140 miles from the center. Storm surge was estimated at 6 to 12 feet. Harvey weakened to a Category 1 by 5:00 a.m. CDT Saturday morning and was downgraded to a tropical storm with sustained winds of 70 mph at 1:00 p.m. later that day.
"As devastating as the wind damage was in Rockport and surrounding towns, flooding from Harvey's torrential rains has had the greatest impact," said Dr. Eric UHLHORN, principal scientist at AIR Worldwide. "With a lack of large-scale atmospheric steering, Harvey's motion was stalled resulting in extremely heavy and continuous tropical rainfall in a concentrated area. Harvey has already unleashed catastrophic and unprecedented flooding in southeastern Texas, and these conditions are expected to last for several more days. Louisiana is already experiencing heavy rainfall; the flood threat there will likely spread eastward once Harvey begins its northeastward path toward Houston."
As of 11:30 CDT on Sunday, it was reported by the Bureau of Safety and Environmental Enforcement (BSEE) that personnel had been evacuated from a total of 105 production platforms, representing 14.25% of the manned platforms in the Gulf. The BSEE estimates that approximately 21.64% of the current oil production in the Gulf has been shut-in and that 25.71% of natural gas production has been shut-in. There have been no reports, as yet, of significant structural damage to offshore assets as a result of Hurricane Harvey.
According to AIR, prior to 2003 Texas had no statewide standards for residential or commercial buildings. Cities chose what, if any, building code(s) to adopt for construction within city limits, and each city amended its code to meet local concerns. In 2003, the Texas Legislature mandated that all homes in the state, including those in the unincorporated areas, be built to International Residential Code (IRC) standards. This was the first statewide residential building code in Texas. In 2003, most cities of Texas adopted modern building codes to reflect improved wind load design provisions for the building envelope. Lastly, in 2004, the legislature mandated that all commercial structures started after January 1, 2006, meet the requirements of the International Building Code (IBC) statewide.
AIR's current estimates include wind and storm surge damage within the extent of Harvey's tropical storm-force and hurricane-force wind field. Included in the estimates are onshore residential, commercial, and industrial properties and their contents, automobiles, and time element coverage (additional living expenses for residential properties and business interruption for commercial properties; the estimates do not, however, include business interruption losses resulting from the closure of oil refineries in the region). Please note that total economic losses are expected to be higher than industry insurable loss estimates.
About AIR Worldwide
AIR Worldwide (AIR) provides risk modeling solutions that make individuals, businesses, and society more resilient to extreme events. In 1987, AIR Worldwide founded the catastrophe modeling industry and today models the risk from natural catastrophes, terrorism, pandemics, casualty catastrophes, and cyber attacks, globally. Insurance, reinsurance, financial, corporate, and government clients rely on AIR's advanced science, software, and consulting services for catastrophe risk management, insurance-linked securities, site-specific engineering analyses, and agricultural risk management. AIR Worldwide, a Verisk Analytics (Nasdaq:VRSK) business, is headquartered in Boston with additional offices in North America, Europe, and Asia. For more information, please visit www.air-worldwide.com.