According to property data analysts at CoreLogic, Hurricane Ida has, as of September 2, left insured and uninsured losses from wind, storm surge, and inland flooding damages to residential and commercial properties in Louisiana, Mississippi and Alabama of an estimated $27-$40 billion.
The night before the storm, experts predicted possible Katrina-like destruction. Fortunately Ida left less loss of life and property than the 2005 disaster, but climate data analysts say warming of the earth could lead to increasing destruction in 2021 and beyond. Property and risk experts discussed with DS News why preparation is so important and what they are doing in the face of increasing natural-disaster danger.
“Hurricane Ida made landfall less than 40 miles away from where Hurricane Katrina made landfall, but the two storms had substantially different characteristics,” said Tom Larsen, Principal, Insurance Solutions at CoreLogic. “Even though Hurricane Ida was a higher wind-speed Category storm at landfall, Hurricane Katrina had a much larger wind field and had spent many hours as a Category 5 hurricane before weakening during its approach to landfall. It brought much higher storm surge than Hurricane Ida and flooded 80% of New Orleans in addition to devastating the Mississippi coast. With climate change affecting the ocean’s temperatures, we should expect to see more frequent and destructive tropical cyclone activity.
He adds that "homeowners and regional public agency leaders should prepare for more resilient city infrastructure and financial protection from catastrophe.”
Broken down, CoreLogic estimated total insured flood loss for residential and commercial properties in the three states to be between $6-$9 billion. Uninsured flood loss for this area is estimated to be between $8-$12 billion. Insured wind losses are an estimated additional $8 billion to $12 billion. More than 90% of the losses are estimated to be in Louisiana, primarily in the nine parishes in the New Orleans-Metairie-Hammond metropolitan area and in the Ascension, Lafourche, Livingston and Terrebonne parishes immediately to the west.
“While only 40 to 50% of the flood damages from Hurricane Ida appear to be covered by insurance, this is actually an improvement from the uninsured flood damages we saw from Hurricanes Harvey and Katrina,” said Larsen. “The flood insurance gap is shrinking.”
As property experts have told DS News, disaster planning has become a core component of mortgage servicing.
“The storms are getting more violent—it doesn’t matter where you live, whether you are in Iowa and having your crops destroyed or in Houston with 70 inches of rains in two days, in Puerto Rico with earthquakes, or wildfires in the West," said Tom O’Connell, SVP of Default Management, Planet Home Lending. "Preparedness is important. Your customers will be impacted, and when they are impacted, they will want to talk to somebody.”
Technology continues to be a major focus in emergency response plans, says Chad Mosley, President, MCS. and member of Five Star Institute's Property Preservation Executive Forum. “Having the best tools in place prior to the natural disaster provides us with the ability to respond quickly and effectively. Software tools that help with weather monitoring are critical in our advance planning. Radars, precipitation measurement tools, flood plan mapping, wildfire burn radiuses and storm path tracking are all essential in tracking potential property damage."
Mosley went on to explain how his company continuously monitors storms, "before they arrive, while we are experiencing them, and in their aftermath to ensure our clients have the most up-to-date information on the potential risk and damage to their properties."
Mosley says MCS closely watches national sites such as FEMA in order to track daily intel and provide details—such as which states have requested assistance for natural disasters—down to the specific zip code. His team has continued to learn and improve following each past disaster.
"After experiencing severe storms and unexpected disasters in the past few years, we continued to invest in software tools that help with weather monitoring and are critical in our advance planning of natural disaster recovery. ... [the technology] allows us to work closely with our clients to quickly plan our next steps for inspections and property repairs."
In addition to real property damage from Ida, the team of mortgage-contract data analysts at ClosingCorp estimated that more than 8,270 pending mortgage transactions currently in progress in Louisiana are in jeopardy as a result of Hurricane Ida. The files, which are being originated by more than 120 different lenders, have a combined value of more than $1.7 billion.
Government agencies have announced disaster relief options for FHFA and FHA-backed mortgages.
As climate change continues to affect the way storms present, the risk in these hurricane-prone areas will continue to increase, according to CoreLogic's Larsen, Thomas Jeffery and other climate experts who authored the 2021 Hurricane report.
They note: "Based on data from NOAA National Centers for Environmental Information, over the past four decades we've seen a 70-90% increase every decade in total inflation-adjusted losses from weather events in the United States—and this trend isn’t slowing down."