"In summary, we have ignored the earth’s environmental stop signs." –Lester R. Brown, Full Planet, Empty Plates
Damage from hurricanes is soaring off the charts, bankrupting insurance companies and depriving property owners of insurance in high-risk areas. During the 1960s, worldwide damage from windstorms with economic losses of $1 billion or more totaled just $4 billion. In the 1970s the figure rose to $7 billion, and in the 1980s it topped $24 billion. Next came the 1990s, when hurricane losses soared to $113 billion. Then during the six years from 2000 to 2005, hurricanes left a staggering bill of $273 billion. (See data.)
Two trends are largely responsible for the growing costs of windstorm disasters. One, rapid coastal development is bringing more people and more expensive infrastructure into vulnerable areas. And two, hurricanes (called typhoons in the western Pacific) are growing stronger and lasting longer, fueled by higher sea surface temperatures. They are also widening their geographic range, invading areas previously considered safe from the wrath of windstorms.
Last year was the worst ever for storm-stricken areas and the companies that insure them. Losses from the eight major storms of 2005 exceeded $170 billion, half of which was insured. Three of the storms were in the Pacific, but the Atlantic storms racked up 98 percent of the economic costs.
The unusually long North Atlantic hurricane season that extended from June into the New Year brought a record 28 named storms, taking us through the alphabet and into Greek letters. This is nearly three times the average annual number of storms over the past century. Fueled by high surface water temperatures, four hurricanes—Emily, Katrina, Rita, and Wilma—reached maximum strength, the highest number of Category 5 storms ever in a single season.
Hurricane Katrina, which struck the Gulf Coast of the United States in late August 2005, was the most financially devastating storm on record, with damages from winds and the record storm surge exceeding $125 billion. Although Katrina reached top wind speeds of 175 miles (282 kilometers) per hour, it had weakened to Category 3 by the time it hit the U.S. Gulf Coast. Powerful Rita’s arrival a few weeks later marked the first time two Category 5 storms developed in the Gulf of Mexico in one season. Then came Wilma, which devastated parts of Mexico’s Yucatan Peninsula and went down in history as the most intense Atlantic storm ever.
Storms in 2005 were not only strong, they were more widespread. Hurricane Vince, which struck Spain in October, traveled farther north and east than any Atlantic tropical cyclone. A month later, Tropical Storm Delta also moved into uncharted territory for Atlantic hurricanes, crossing the Canary Islands. Stronger storms in unexpected places, like these and Brazil’s 2004 Hurricane Catarina, the first hurricane recorded in the South Atlantic, are prompting insurance companies to rewrite their catastrophe models.
Of the 90 or so tropical cyclones that are born each year, about half grow strong enough to be classified as hurricanes. The ingredients needed to whip up a hurricane are sea surface temperatures of at least 79 degrees Fahrenheit (26 degrees Celsius) and favorable wind conditions. Higher sea surface temperatures drive more-powerful storms.
Over the last three decades, tropical ocean surface temperatures have risen by nearly 1 degree Fahrenheit (half a degree Celsius), an increase of a scale not seen in at least 150 years and perhaps unprecedented over several thousand years. Kerry Emanuel of the Massachusetts Institute of Technology reports that hurricanes and typhoons in the Atlantic and North Pacific have doubled in power over this period. Storms are also lasting longer than before. And as temperatures rise from increased greenhouse gas emissions, even stronger storms are on the horizon. Warmer air also holds more water vapor, increasing rainfall and thus flooding.
Already more hurricanes are reaching the top-rated Category 4 and 5 strengths. Scientists from the Georgia Institute of Technology have shown that in ocean basins around the world, one out of every three hurricanes in the 1990s and early 2000s became that powerful, compared with fewer than one out of every five during the late 1970s and 1980s. (See data.) Stronger storms are disproportionately more destructive. While a Category 1 storm has wind speeds of 74–95 miles per hour and can result in a storm surge of some 4 feet (1.2 meters) above normal, a Category 5 storm—with double the wind speed—can bring on a storm surge of more than 18 feet. (See Hurricane Classification Scale.)
The recent spate of powerful hurricanes in the southern United States has put many insurers out of business or into liquidation, leaving customers scrambling to find new coverage, an increasingly difficult endeavor. Many hurricane-prone property owners are facing a doubling or tripling of insurance rates over the next several years. The world’s largest insurer, American International Group Inc., is no longer taking on new policies in some Gulf Coast communities. Allstate, one of Florida’s largest insurers, dropped 95,000 policies in 2005 and plans to drop an additional 120,000 this year. As state or federal insurers jump in to cover properties that private companies will no longer touch, essentially subsidizing development in risk-prone areas, they often incur large deficits that someone, generally the taxpayer, must cover.
Not only are southern states affected: Allstate is dropping 28,000 of its New York policyholders as well. Neither Allstate nor MetLife will take on additional customers on Long Island, New York, which was the direct target of the legendary 1938 “Long Island Express” Category 3 hurricane. According to AIR Worldwide, a risk-modeling and technology firm that serves the insurance industry, a Category 5 storm hitting the New York area today would incur $96 billion in losses. In Miami, a storm of that strength would rack up a bill of $155 billion.
More than 40 percent of the U.S. population resides in coastal counties, many of which are growing fast. The country’s most rapid population growth has been in Florida, the state most at risk from hurricanes, with 1,350 miles of coastline and no point farther than 80 miles from the water. The population along the hurricane-prone coast between North Carolina and Texas more than tripled, from 10 million to nearly 35 million, over the past 50 years.
One in every 10 people on the planet lives in an extremely vulnerable zone within 60 miles of a coastline and less than 33 feet above sea level, and more people seem to be heading in that direction. In developing countries, where insurance now covers less than 2 percent of the costs of “natural” disasters (compared with the United States, where half are insured), hurricanes can set back development by decades. When Hurricane Mitch hit Honduras and Nicaragua in 1998, for example, it took more than 11,000 lives and left a destruction bill exceeding the two countries’ gross domestic products.
Stronger storms coupled with larger vulnerable populations represent a recipe for economic and humanitarian disaster. The $273 billion in damages from major storms so far this decade will continue climbing. Departing from the temperatures we have known means that the past can no longer be used as a guide to the future. Climate patterns become more difficult to anticipate and the risks harder to predict.
At some point, the human tides may turn and more people may move inland, as we have recently seen with the abandonment of communities ravaged by Katrina. In the meantime, the question becomes not whether we can afford to reduce the carbon emissions that are raising the earth’s temperature, but whether we can afford not to.
Copyright © 2006 Earth Policy Institute