Karen Clark & Company (KCC), independent experts incatastrophe risk, catastrophe models and catastrophe riskmanagement, today issued a report in conjunction with the one-yearanniversary of Superstorm Sandy. The report examines the uniqueaspects of the storm, the Northeast's vulnerability to coastalflooding and how future storms could be worse than Sandy. Thereport also reviews the legacy of the storm and its impact oninsurers and coastal communities.

The full report is available at www.karenclarkandco.com.

Sandy came ashore near Atlantic City on a path nearlyperpendicular to the New Jersey coastline on October 29, 2012. Atlandfall, the storm was characterized by the National HurricaneCenter as a post-tropical cyclone with hurricane-force winds.Tropical storm force winds stretched nearly 1,000 miles across thecirculation. Due to Sandy's immense size and unusual northwesterlytrack, high winds extended throughout the Mid-Atlantic andNortheast. The winds caused damage well inland along with poweroutages and disruptions to transportation and communications. Thegreatest impact, however, was along the coast, with severe damagecaused by flooding from Sandy's extensive storm surge, whichmeasured 14 feet in some areas. Total losses for the storm areestimated at $65 billion, with the insured portion just under $20billion.

“While not the most expensive storm to impact the U.S.coastline, Sandy was the most costly borderline Category 1/tropicalstorm to make landfall in the historical record,” said Karen Clark,President and CEO, KCC. “A rare combination of severalmeteorological phenomena occurred as Sandy was moving up the EastCoast resulting in its unusual track. This path, combined with thestorm's immense size resulted in damages much greater than expectedfor such a weak hurricane.”

The Northeast United States is particularly vulnerable to stormsurge given its relatively shallow coastal waters, presence ofinlets, bays and rivers, and local topography. In addition, a stormthat makes landfall perpendicular to the coastline, as Sandy did,will produce a higher surge than the same storm moving parallel tothe coast or coming ashore at a different angle. Storms with broadcirculations also create a greater amount of surge than smallerstorms.

KCC's RiskInsight platform, which was recently updated toinclude storm surge flooding, provides detailed, high-resolutionelevation data and can be used to identify areas and propertieslikely to be impacted by storm surge. RiskInsight estimates$300 billion of property value in Sandy's flood footprint andnearly $50 billion of flood damage to properties.

Future storms could prove much more damaging than SuperstormSandy. For example, the Great New England Hurricane of 1938, if itwere to happen today, would likely cause insured losses at leasttwice those of Sandy. The storm surge heights would be similar,although in different locations, with the most significantinundations along the coasts of eastern Long Island, Connecticut,Rhode Island and southern Massachusetts. RiskInsight estimatesa repeat of the 1938 storm would cause flooding and wind damagestotaling over $100 billion.

“Sandy's large size and right-angle approach to the coastlinegreatly enhanced the storm surge,” said Clark. “Had Sandyfollowed a more typical path parallel to the coast, the surge wouldhave been much less, particularly in New Jersey, Staten Island, andQueens. Given Sandy's unusual characteristics, the likelihood ofsuch a storm occurring again is very low, but future stormsfollowing more probable tracks and causing more extensive damageare much more likely.”

Sandy's unusual track was due primarily to the position of thejet stream. Some scientists have speculated that climate change isweakening the jet stream and increasing its tendency to meander. Aclimate scientist at Rutgers University has suggested the northwardswings in the jet stream, like the one that existed at the time ofSandy, are happening more frequently, and that one month beforeSandy, the Arctic sea ice extent reached a record low. That said,scientists generally agree that a direct link can't be made betweenlow sea ice and Sandy's track. There is however widespreadagreement that continuing sea level rise contributed to thesignificant storm surge damage from Sandy.

“The current scientific consensus is that climate change is notlikely to produce more tropical cyclones but might in fact resultin fewer but more intense storms,” said Ms. Clark. “That said,flooding damage from all types of storms will be exacerbated asocean levels continue to rise.”

“Sandy has heightened awareness of the threat of the hurricanehazard in regions where the historical frequency has been low,”said Ms. Clark. “Sandy clearly demonstrates that even weak tropicalsystems can cause tremendous damage in the Northeast, primarilybecause storms tend to be large in this region and there are suchhigh concentrations of property values. While Sandy was devastatingto many coastal communities, there have been positive outcomes suchas increased dialogue at the local, state and federal level oncoastal hazards and how to mitigate the impacts of futurestorms.”

“We are very pleased to extend the RiskInsight platform toinclude storm surge flooding,” added Ms. Clark. “We have seenincreased demand for this offering from insurances companiesbecause insurers realize that only with the complete transparencythat RiskInsight provides can they fully understand the risk andfeel confident in their pricing and risk management decisions.”