The U.S. NOAA’s National Hurricane Center (NHC) has announced plans to launch a storm surge watch and warnings graphic, the next phase following their Potential Storm Surge Flooding Map that launched at the start of the 2014 Atlantic Hurricane Season.
As we reported previously at Artemis the NHC released the freely, and readily available storm surge maps to aid a better understanding of where and when a storm surge might occur, ultimately resulting in better evacuation methods and saving more lives.
So now the NHC is continuing the roll-out of storm surge information related to tropical storms and hurricanes with a new, experimental storm surge watch and warning graphic. The NHC explains that; “Having separate warnings for these two hazards should provide emergency managers, the media, and the general public better guidance on the hazards they face when tropical cyclones threaten.”
Storm surge can often be a greater risk to properties and people’s lives than the actual cyclone or storm itself, as a surge can happen separately to the actual tropical storm or hurricane and in different areas, people are often uneducated or underestimate just how threatening they can be.
The understanding of storm surge as a stand-alone peril has only recently become evident in the insurance-linked securities (ILS) and catastrophe bond market, highlighted by the first storm surge focused cat bond, MetroCat Re Ltd. The deal came to the market in June 2013 and its success showed that the ILS and cat bond sector is becoming more aware of the opportunity to provide risk capital to back storm surge insurance protection.
The NHC explains that it plans to fully implement the broad watch/warning information and maps by 2017, stressing that it will be experimental for at least two years. During the experimental time “comments from users will be solicited and considered. Only the graphic itself will be available during the experimental period; the underlying raw data, including shape files, will not be disseminated,” said the NHC.
With sea levels set to rise in coming years the risk of flooding and surges increases, so whether experimental or not, it’s certainly a step in the right direction.
Insurers, catastrophe bond players, reinsurers, ILS players and brokers will also feel the benefits of the NHC’s newest venture, an accurate, more comprehensive view of storm surge will prove invaluable to their risk assessing and portfolio building.
So from the start of the 2015 Atlantic hurricane season in June, any tropical cyclones that threaten to cause a storm surge will have watch and warnings alerts issued by the NHC. These could prove useful to insurers, reinsurers and the catastrophe bond market.
Interestingly these watch and warning alerts could actually stimulate secondary or live cat trading on exposed catastrophe bond or other reinsurance positions. It will be interesting to see how investors respond to the availability of a new source of data which gives them more certainty that a storm surge may be on the verge of occurring. We’ll be making use of these alerts and maps and bringing them to you throughout the 2015 season as they become available.