Experts Say Hurricane Danger Ignored

By Mark E. Ruquet

NU Online News Service, May 28, 3:22 p.m.EST?Buck passing that allows flood zone building couldundo many of the loss prevention gains from hurricane research inthe 10 years since Hurricane Andrew devastated Florida, two expertsin the business of forecasting catastrophe impacts said.

The pair of catastrophe modelers from SwissRe said a lot ofknowledge and know-how has been gained, but dangers still lurk inthe eye of any coming hurricane.

Andrew Castaldi, head of catastrophe and perils, and Dr. GerryLemcke, deputy head of catastrophe perils, discussed the currentstate of preparedness, for both the insurance industry andcommunities on the eve of a major hurricane conference.

The session in Miami Thursday and Friday at the FloridaInternational University is the Hurricane Andrew 10-YearAnniversary Summit.

With hurricane season set to begin June 1, forecasters arepredicting 12 named storms and seven hurricanes for the Atlanticbasin.

By some reckoning, there is a 57 percent chance the U.S. EastCoast could be hit by a major hurricane this season, and a 75percent chance the entire U.S. coastline through the Gulf of Mexicocould see a hurricane reach landfall.

Mr. Castaldi said that much research work done over the past 10years has meant saving lives in the event of a storm. However, heand Mr. Lemcke said predicting the amount of loss that could occurfrom a storm remains a significant problem.

While there is a lot of historical data about events, points outMr. Lemcke, there has not been much progress for the insuranceindustry when it comes to looking at the overall picture oflosses.

In order to know the severity of loss to the industry, expertsneed to know the severity of the storm in advance and this remainsa difficult area of determination.

"There is still a lot of room to improve," Mr. Lemcke said.

Mr. Castaldi said companies have taken some lessons away fromAndrew. Ten years ago, many insurance companies were "caughtblind," and didn't know they could see that much loss, he said.

Insurers have a better understanding of the exposure today, andthough it remains difficult to predict the amount of loss from astorm, they are prepared for the worst.

"Companies are well prepared and know what is on the horizon,"Mr. Castaldi said. "They know what to do the day after."

Company's reserves are better prepared for a catastrophic eventand insurers are "not going to fold" over the losses, said Mr.Castaldi. He noted that SwissRe is also fully prepared "for thisand other multiple disasters."

Another factor in this equation is the improvement in buildingmethods impelled by tougher construction codes and enforcement.Additionally there is the Institute For Business & Home Safetyseal of approval stamp that is placed on homes meeting the stricterstandards. These elements should combine to substantially reducestructural storm damage to homes and businesses, Mr. Castaldipointed out.

However, building has continued in some areas that areconsidered flood prone, said Mr. Lemcke, especially near thecoast.

Such construction raises concern that much of the effort byexperts over the years may be defeated. While wind speed is themajor item of discussion in any storm, people forget that the majordamage from any hurricane is the storm swell that causes coastalflooding, he said.

There is a lack of will on the part of some public officials todeal with the issue, Mr. Castaldi asserted. They are looking toinsurers to dissuade homeowners to not build in these areas by notproviding coverage in the flood prone areas. However, shouldcompanies not provide insurance, they would be accused ofredlining, he said.

"Everyone is looking for someone else to solve the problem," Mr.Castaldi remarked.

Knowing the affects of a storm surge in a given area is also anarea where more information is needed, Mr. Lemcke said. While largemetropolitan cities have studies produced by the Army Corps ofEngineers on this, smaller coastal areas have no such studies. Hesuggested this is an area major insurers should begin to lookinto.

However, Mr. Lemcke pointed out, the ability to predict whatcould happen during a hurricane event is steadily seeingimprovement. He said forecasters have improved their ability onepercent each year and forecasting is 30 percent better than it wasduring Andrew.

The experts concluded that while a lot has been accomplished toproduce a forecast that saves lives and protects communities, muchwork still remains to produce a forecast that helps insurance andreinsurance companies predict losses.