The most active period for major hurricanes in the US was 1931-1960. The frequency of major hurricanes is now about half what it was 60 years ago. The most intense hurricane to ever hit the US occurred in 1935.
The Trillion-Dollar Storm: Will Hurricanes Drive Us Off The Coasts?
As storms become more powerful and more damaging, will living on the coasts become simply impossible? Insurance companies might try to price you out before we find out.
More than a month after Hurricane Irene narrowly missed making landfall on Wall Street and pummeled the East Coast with floods, the effects of the storm continue rippling outwards. Congress narrowly avoided a government shutdown over a bitter dispute over FEMA funding after a summer of disasters had drained its accounts. Meanwhile, insurers are potentially facing $5.5 billion in losses, not counting flood damage (which isn’t covered under most homeowner policies) or economic losses stemming from power outages and destroyed roads or rail.
That isn’t much to sweat about for an insurance (and reinsurance) industry reeling from $70 billion in losses stemming from the Japan and Christchurch earthquakes. But like the Japanese quake–which raised the specter of the “Big One” under Tokyo–Irene came close to being the Big One of hurricanes with a direct hit on Lower Manhattan. The prospect of billions upon billions of dollars in physical and economic damages from a single storm is enough to make one wonder whether we should stop building on the coasts altogether.
That’s the scenario hedge fund manager and catastrophe bond pioneer John Seo had in mind when he predicted in the current issue of Foreign Policy that “a decade and a half from now, a single hurricane or earthquake will come with a potential price tag of $1 trillion or more. Imagine a world in which economic damage equivalent to that caused by a major war or the detonation of a midsized nuclear weapon in a major city could materialize with a warning of only a few days.”
Right. Irene made a direct hit on Lower Manhattan as a tropical storm and did essentially no damage, other than Bloomberg panicking and shutting down billions of dollars worth of commerce.