October 31st, 2012

Update: Sandy

Posted at 4:00 PM ET

sandy-6-smallAs always, our immediate thoughts and concerns are with those directly affected by Sandy, both in North America, and across the Caribbean. Many areas along the East Coast, and the Caribbean, bear signs of unspeakable consequences from this historic storm. The death toll in North America is now at least 55 (including one in Canada), in addition to the 67 who died in the Caribbean last week.

The full scope of Sandy’s impacts will still take a day or two to emerge. As storm surge recedes and those affected survey the damage, the last 24 hours have brought new reports of downed trees and power lines, with localized inland flooding, over an incredibly large area from the Mid-Atlantic to the Great Lakes to Atlantic Canada. Lakeside flooding continues to be a concern in the Great Lakes. Damage concentrations from the point of landfall to Massachusetts are highest, particularly in those areas affected by storm surge. Long Island and New Jersey sustained the worst of the coastal flooding impacts. At least one million people have been displaced in affected areas. At least 8.1 million homes were without power.

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Hazard data illustrated in the CAT-i map was taken from i-aXs®, Guy Carpenter’s web-based risk management platform. i-aXs users can view impacted areas on any map as well as see how their portfolios were affected. Please contact your broker or GC Analytics®   representative for assistance or go to www.i-axs.info for further information.

AIR Worldwide released a statement yesterday of expected insured losses between USD7 billion and USD15 billion. Eqecat, in their statement from October 29, estimated insured losses of USD5 billion to USD10 billion, and total economic losses of USD10 billion to USD20 billion. Hurricane Irene caused insured losses on the order of USD 4.3 billion.

Sandy’s remnants are gradually losing their identity over Southern Ontario. However the minimum pressure is still 996 mb, and the circulation is still evident from the Great Lakes to the Southeast. A residual threat remains for storm force winds over a large area, and minor flooding along coastal areas including the Great Lakes. This is only a shadow of what was once a powerful, historic and deadly storm.

Meteorological Forecast

Sandy’s remnants are losing their identity. Sandy has degraded into a broad area of low pressure and frontal system, at a minimum pressure of 996 mb. The circulation of this system remains exceptionally large. While uniform surface winds have decreased significantly, storm force gusts are still possible over a very large area, particularly marine areas including the Great Lakes, the Mid-Atlantic, the Northeast and the Saint Lawrence. The residual threat from Sandy should dissipate over the next few days.

Hazards, Watches, Warnings

Flood and coastal flood watches and warnings remain in effect for the same areas, and many rivers could crest in the short-term from excessive rainfall over source watersheds. Some flood and wind damage is still possible over this very large area. Winter storm warnings and advisories remain in effect for the Appalachians and surrounding areas. The residual threat should gradually subside over the next few days. Specific products can be found at www.weather.gov at a national level, and locally by typing in a zip code on the same site.

Impacts

Those immediately affected by Sandy, particularly for the most severely impacted areas, are enduring very difficult conditions. Our first thoughts and concerns are with them, and with the more than 120 who have lost their lives as a result of this storm. It will take at least a few days for the implications and breadth of Sandy’s impacts to emerge. A complete and thorough assessment will take weeks, if not longer.

Downed trees and power lines have been reported for a vast area of the Mid-Atlantic and Northeastern U.S., together with flooded roadways. Some structural damage has also been reported. Damage concentrations from the point of landfall to Massachusetts are highest, particularly in those areas affected by storm surge. Long Island and New Jersey sustained the worst of the coastal flooding impacts. Sandy obviously hit a high-population region with a high concentration of homes and businesses and over a very large area. About 7,400 National Guard members have been activated to support relief efforts, and at least one million people have been displaced within affected areas.

Many roads in the northeast are still impassable due to downed trees and power lines, and flooded roadways. At least 8.1 million homes were without power. At least 6.3 million still remain without power, and power outages have affected 19 states. Business, school and government office closures affected the entire area, together with disruptions to telephone and cellular communications.

Shipping and business travel was suspended in the northeast. More than 19,500 flights have been cancelled since Sunday, after closure of many airports across the affected area, including JFK, Newark, Philadelphia and LaGuardia. JFK and Newark are now open to limited service, with other airports accepting additional traffic to accommodate displaced travelers. Recovery from flight disruption could take days.

Amtrak has restored service between Virginia and Newark, but cannot resume into Long Island until tunnels are cleared and repaired. Restoration of mass transit and rail service requires clearing and repair of flooded tunnels, rails and electrical systems before service can be restored.

Three nuclear reactors were closed, with a fourth on emergency alert due to rising storm waters; no public risk as been identified. East Coast refineries and energy assets are slowly resuming production, after 70 percent were shut down. The second-largest refinery on the East Coast was inundated during this event. The largest in Philadelphia has slowly resumed production after largely escaping damage.

It is possible that Sandy’s impacts could cause an increase in the U.S. dollar, and a lift to the economy during reconstruction efforts (of course recognizing the incredible toll the storm has taken on so many people). Losses are said to potentially triple those of Irene, and lost business could result in USD10 billion to USD30 billion according to IHS Global Insight. It is possible that the National Flood Insurance Program may exhaust reserves as a result of Sandy. Fannie Mae and Freddie Mac may offer help to affected borrowers on a temporary basis. Estimates are for only small effects on the U.S. economy at large for the fourth quarter, despite severe short-term impacts. The New York City area was severely affected, and produces about 10 percent of U.S. economic output.

The physical damage appears to be far more pronounced than from Irene (2011), as anticipated. AIR Worldwide released a statement yesterday of expected insured losses between USD7 billion and USD15 billion. This estimate excludes flood losses from residential, subway and tunnel damages. Eqecat, in their statement from October 29, estimated insured losses of USD5 billion to USD10 billion, and total economic losses of USD10 billion to USD20 billion. Hurricane Irene caused insured losses on the order of USD4.3 billion. Other sources indicate potential economic losses on the order of USD50 billion. European stock markets, oil markets, airlines and insurance companies have all been affected by the storm. The closure of Wall Street for the second day yesterday, the first time since September 11, 2001, has led to decreased volume worldwide.

Coastal Areas

Many coastal areas from New Jersey to Long Island were battered by a historic storm surge and battering waves of 15-20 feet. Portions of Long Island recorded surge levels exceeding 13 feet. Significant damage has occurred to many homes and businesses for these regions, and many structures will be unsalvageable. While flooding is the obvious source of damage, winds and further impacts from fractured gas or power lines are numerous.

Appalachians

Over two feet of snow have been reported for many areas along the Appalachians. Affected areas include Eastern Kentucky, Virginia and Tennessee.

Great Lakes

High waves and heavy surf are expected along Lake Michigan, Lake Erie, Lake Huron and Lake Ontario. Strong winds have caused downed trees and power lines, with some light structural damage, for many areas. Numerous power outages have been reported. Cargo shipping has been suspended as a result of 20 foot waves. Two fatalities were reported in Ohio. Power outages were reported in Ohio for 147,000, down from a peak of 250,000.

New Jersey

The New Jersey coastline has been described as a scene of “sprawling devastation.” Storm surge has devastated a significant portion of many areas including Ocean City and Atlantic City. Damage swaths are historic in nature. President Obama is expected to survey damage for severely affected areas today with Governor Chris Christie. Three towns adjacent to New York City were inundated with up to five feet of water. Many fires along the shore were ignited by downed power lines, and fueled by natural gas leaks. The National Guard is onsite in Hoboken to conduct evacuations and distribute supplies. Newark Liberty Airport has reopened with limited service. There have been six fatalities. More than 2.1 million remain without power, from a peak of 2.7 million.

New York

Storm surge levels exceeded 13 feet for portions of Long Island, with record surge levels reported for many locations including Battery Park. The surge was enough to top flood protection walls surrounding Lower Manhattan, leading to flooding for a significant area. Power had to be cut to Lower Manhattan due to flooding of the power grid, and to prevent catastrophic damage and further loss of life. For Breezy Point, a series of fires occurred burning over 80 homes to the ground; these were caused by a combination of floods, downed power lines and fractured gas lines. A ship was reported sitting on railway tracks, and many cars were found floating in a parking lot. Many subway tunnels were flooded, together with urban tunnels, causing a transportation nightmare.

New York City Subway service could be out for several days, and buses are operating on limited service. About 1.9 million are still without power in New York, from a peak of 2.2 million. Many month-end reports from major companies will be delayed. JFK Airport has reopened with limited service. LaGuardia Airport remains closed with flooded runways and ramps; no estimated opening date has been given. The New York Stock Exchange reopened today after a two-day shutdown; the first unplanned closure since September 11, 2011. Full recovery from mass power outages could take several weeks, but a great deal of restoration, particularly to Lower Manhattan, could be in place within four days.

At least 29 deaths occurred in New York State, with 22 in New York City.

Pennsylvania

Numerous reports of flooding, downed trees and power lines, with road closures cross the state. At least seven fatalities were reported. At least 800,000 remain without power, down from 1.2 million. Nearly 400,000 power outages were reported in the Philadelphia region. Restoration efforts may take a week. Hundreds of bridges and local roads in eastern Pennsylvania are obstructed due to debris or flooding in the road.

Connecticut

Widespread and severe damage was reported to homes along Long Island Sound. Three fatalities have been reported. At least 482,000 are still without power, from a peak of 620,000. At least three homes in the town of Greenwich were destroyed in a fire that spread during the storm.

Ohio

Two deaths were reported in Ohio. High winds from Sandy uprooted trees in northern Ohio. Flooding along Lake Erie has closed schools and major roads in the area. Nearly 147,000 homes and businesses are still experiencing power outages. 

Delaware

Some coastal areas remain under water. At least 7,400 are still without power, from a peak of 45,000.

Rhode Island

Many residents of coastal communities are still unable to return to their homes. At least 48,000 are still without power, from a peak of 115,000.

Maryland

Efforts are underway to recover from the storm surge for coastal areas. Western Maryland reported at least 29 inches of snow. Two fatalities were reported. About 300,000 were without power. Four unoccupied rowhouses in Baltimore were said to have collapsed in the storm.

Massachusetts

Damage to coastal areas was reported, along with downed trees and power lines. Power outages peaked at 400,000, and are now down to 100,000.

Maine

The Port of Portland has reopened. Power outages affect 16,000, from a peak of 90,000.

Ontario

Downed trees and power lines were reported for many locations, particularly around Toronto. One fatality was reported. At least 145,000 lost power in Ontario.

New Hampshire

One fatality was reported. Power is still out for 81,000, from a peak of 210,000.

North Carolina

One ship was lost during Sandy’s passage north, and the search continues for the captain. Snow has affected western regions of North Carolina. Two fatalities have been reported. At least 400 still remain without power, down from a peak of 126,000.

Vermont

Downed trees and power lines were reported. Two fatalities have been reported. Power outages still affect 40,000, from a peak of 180,000.

Virginia

Two fatalities have been reported. Power outages still affect 40,000, from a peak of 180,000.

Washington D.C.

Federal and local governments returned to work, and full service is expected for mass transit systems. Power outages affected 25,000. Power has been restored to most homes and businesses.

West Virginia

Some areas are still under a foot of snow. At least five deaths have been reported. Power outages still affect over 200,000, from a peak of 268,000.

Sources: National Hurricane Center (NOAA), Storm Prediction Center (NOAA), National Weather Service (NOAA), Hydrometeorological Prediction Center (HPC/NCEP/NOAA), Associated Press, Reuters, Agence France Presse, Forbes, CNN, Wall Street Journal.

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Guy Carpenter publishes CAT-i reports for major natural catastrophes worldwide. These reports cover catastrophes including worldwide tropical cyclones, earthquakes, major UK and European floods and any other natural event that is likely to incur a significant loss to the (re)insurance industry. Please email CAT.i@guycarp.com if you wish to be added to the free email distribution list.

Guy Carpenter compiles RISK-i reports for major technological or man-made events worldwide. These reports cover risks to property, transport and life including explosions, fires, crashes, engineering disasters and terrorist attacks that are likely to incur a significant loss to the (re)insurance industry. Please email RISK.i@guycarp.com if you wish to be added to the free email distribution list.

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