In 2015, The Perryman Group prepared a study to assist the efforts to reform the windstorm insurance system which focused on the possibilities of major storms along the Gulf Coast. While the analysis obviously does not reflect the unique and unprecedented effects of Hurricane Harvey, it does provide some useful insights. Given the significance of this historic storm and its role in the economy in the coming months, we wanted to share these insights.
On August 29, Hurricane Ida made landfall near New Orleans causing wind damage and flooding. Its remnants have caused significant issues across the eastern United States. The human suffering is of paramount importance and should be the primary concern, as well as enormous emotional losses. In addition, the storm will have a significant impact on the economy.
Category 4 Hurricane Laura made landfall just after midnight on August 27, 2020 in Cameron Parish, Louisiana, about 35 miles east of the Texas border. While the damage was significant, the economic costs could have been far worse. The Perryman Group estimates that if the storm had made landfall as a direct hit on one of the nearby refining and petrochemical areas (such as Beaumont), the economic losses could have been 8 to 10 times as large as preliminary damage estimates have indicated.
Hurricane Michael made landfall at the Florida Panhandle on October 10 before moving towards Georgia, the Carolinas, and Virginia. In addition to the tragic loss of life, the storm caused substantial wind damage and devastating flooding. Recent preliminary damages estimates by the National Weather Service indicate property and short-term losses of over $30 billion.
Hurricane Florence made landfall at Wrightsville Beach, North Carolina on September 14 before moving over eastern South Carolina. In addition to the tragic loss of life, the storm caused substantial wind damage and devastating flooding. Recent preliminary damages estimates by Moody's Analytics indicate property and short-term losses of $17-$22 billion.
The third major hurricane in two months hit the United States in late September, this time impacting Puerto Rico and surrounding islands. A category 4 storm at landfall, Hurricane Maria hit south of Yabucoa Harbor in Puerto Rico on September 20, with sustained winds of 155 miles per hour. The storm caused the electrical infrastructure of the entire island to be destroyed, and some estimates put the restoration of power on the island on a six to eight or even 10-month time frame. Hurricane Maria also extensively damaged drinking water supply systems, hospitals, schools, and cell service infrastructure.
With Hurricane Irma making landfall in Florida, the US has suffered two major hurricanes in a little over two weeks. Fortunately, the impact of Irma was not as bad as initially feared, although it still created significant damage and destruction of homes and businesses. The human suffering is of paramount importance, and the emotional losses are enormous. As with Hurricane Harvey, Hurricane Irma will have a significant impact on the economy.
The Trump Administration has announced a decision to end Deferred Action for Childhood Arrivals (DACA), an immigration program allowing individuals who entered the United States as children to remain here for school or work. Nearly 800,000 persons are enrolled in the program. Approximately 124,3000 of these "Dreamers" live in Texas, with a high concentration in Houston and the Gulf Coast region.
Hurricane Harvey has proven to be a catastrophic, unprecedented storm, and its impact has worsened as the storm has continued and surpassed multiple estimates of worst-case scenarios. Harvey is now recognized as the wettest in the history of the continental US and in some areas rainfall has surpassed the average annual totals in less than a week. Many experts are now referring to Harvey as a 1,000-year flood, meaning the likelihood of an event like this occurring is only once in 1,000 years.