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Page 1 Recording of this session via any media type is strictly prohibited. HURRICANE SANDY RESPONSE AND AFTERMATH - The New Reality of Natural Hazard.

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Presentation on theme: "Page 1 Recording of this session via any media type is strictly prohibited. HURRICANE SANDY RESPONSE AND AFTERMATH - The New Reality of Natural Hazard."— Presentation transcript:

1 Page 1 Recording of this session via any media type is strictly prohibited. HURRICANE SANDY RESPONSE AND AFTERMATH - The New Reality of Natural Hazard Risk April 29, 2014 Savita Goel, WDP & Associates Heather Roiter Damiano, NYC Office of Emergency Management David F Smith, EQECAT Damian Wach, Prudential Mortgage Capital Company

2 Page 2 Recording of this session via any media type is strictly prohibited. Assess how natural hazards and their threat to your organization have changed. Lessons learned from the vantage point of key players in post- event response Incorporate your peers’ life-lesson adjustments into your own natural disaster response program LEARNING OBJECTIVES April 29, 2014

3 Page 3 Recording of this session via any media type is strictly prohibited. Introduction to Speakers Hurricane Sandy and CAT Modelling Overview of NYC Infrastructure Key Characteristics and Vulnerabilities Aftermath of Hurricane Sandy Challenges with Planning Post-Sandy Risk Manager’s outlook Discussion on Lessons Learned Q&A OUTLINE April 29, 2014

4 Page 4 Recording of this session via any media type is strictly prohibited. Introduction to Speakers -Savita Goel, WDP -David Smith, EQECAT -Heather Roiter, NYC OEM -Damian Wach, Prudential INTRODUCTIONS

5 Page 5 Recording of this session via any media type is strictly prohibited. Superstorm Sandy - Highlights Cat 1 (80 mph 1-minute) at Atlantic City, NJ landfall Very broad windfield o ~1000 mile diameter of tropical storm force winds o Rmax significantly larger than 1938 storm o ~$ 20 trillion in insurable assets in affected states Very low pressure (948 mb recorded at Atlantic City) Surge heights: o ~14 feet in lower Manhattan: extreme o ~9 feet at Atlantic City: not as exceptional but still very damaging in portions of the NJ coast Rainfall amounts and rates ~ lower than Irene o Much less inland flooding

6 Page 6 Recording of this session via any media type is strictly prohibited. Superstorm Sandy Superstorm Sandy Track Historic Tracks 1903 was only event that directly struck NJ coast (Cat 1, transitioning)

7 Page 7 Recording of this session via any media type is strictly prohibited. Modeled landfall frequencies (long term): Virginia – Maine ~ 1 / 8 years New York ~ 1 / 20 years New Jersey ~ 1 / 180 years

8 Page 8 Recording of this session via any media type is strictly prohibited. Boston New York Philadelphia Washington Baltimore Atlantic City Sandy Long Island Express Irene-2011 Storm Name Intensity (mph) Rmax (km) Forward Speed (km/hr) Irene (NJ) Sandy

9 Page 9 Recording of this session via any media type is strictly prohibited. Reported Atlantic City, NJ - 77 mph Cape May, NJ - 73 mph Clifton, NJ - 80 mph Coney Island, NY - 69 Dennisville (Near Cape May) - 81 mph Greenwich, CT - 70 mph Islip Airport, NY- 90 mph JFK Airport, NY– 79 mph Montclair, NJ - 88 mph New Haven, CT - 85 mph Newark Airport, NJ - 78 mph Ocean City, NJ - 60 mph Sandy Hook, NJ - 87 mph (it is a buoy) Sandy Hook, NJ (onshore) - 81 mph Surf City (Ocean County), NJ - 89 mph Tompkinsville, NY – 90 mph White Plains Airport, NY – 72 mph Philadelphia Baltimore Washington New York Boston

10 Page 10 Recording of this session via any media type is strictly prohibited. Surge - Enhancing Factors Higher Winds Lower Pressure Faster Translation Speed Perpendicular Landfall Wider Storm - More Area Affected Shallow Offshore Slope Confining Coastline Geometry Peak Surge occurring at High Tide Higher Astronomical Tide (Full/New Moon) Factors enhancing Sandy’s Surge at Landfall

11 Page 11 Recording of this session via any media type is strictly prohibited. Surge – Coastline Geometry NY Bight: The “corner” where NJ and NY meet at approximately 90º. Sandy’s track allowed for a long duration of winds directing water into Raritan Bay and NY Harbor. L Water can be funneled into the corner and pile up with nowhere to go but up.

12 Page 12 Recording of this session via any media type is strictly prohibited. Battery Park NYC – Storm Tide Storm Surge Normal Tide Resulting Storm Tide

13 Page 13 Recording of this session via any media type is strictly prohibited. Superstorm Sandy – Loss Estimates Losses By State Losses By Line of Business The estimated economic loss for this event is about $30 to $50 Billion Based on the event footprint and EQECAT IED, the post-landfall (Nov. 1, 2012) insured loss estimate for Sandy is approximately $10 to $20 Billion (Later revised to $15-$20 Billion) Latest PCS: $18.75 Billion ~1-in-10 for U.S. ~1-in-70 for Northeast (VA-ME)

14 Page 14 Recording of this session via any media type is strictly prohibited. Residential flood insurance take up rates in New York in 2010 with Sandy storm surge estimates Source: Resources for the Future, with data from FEMA

15 Page 15 Recording of this session via any media type is strictly prohibited. Residential flood insurance take up rates in New Jersey in 2010 with Sandy storm surge estimates Source: Resources for the Future, with data from FEMA

16 Page 16 Recording of this session via any media type is strictly prohibited. Flood Damage The National Flood Insurance Program (NFIP) reports that for a 1-story building, the average cost to replace by flooding height is: 1 foot - 22% 2 feet - 32% 6 feet - 58% 8 feet - 68% NFIP reports that 25 to 30 percent of all paid losses were for damage in areas not officially designated at the time of loss as special flood hazard areas. (NFIP coverage is available outside high-risk zones at a lower premium.)

17 Page 17 Recording of this session via any media type is strictly prohibited. Hurricane / Named Storm Deductibles (1) Special hurricane deductibles had been introduced in 10 of the states affected by this event (DE, MA, MD, ME, NC, NY, RI, SC, VA), increasing the portion of hurricane damage that is the responsibility of policy holders. Hurricane deductibles are separate thresholds that damage must exceed before insurers will indemnify losses. Hurricane deductibles of from 1% to 5% of the structure replacement value are not uncommon. Some hurricane deductibles have Cat 2 or 3 thresholds. Insurance Commissioners and Governors were quick to instruct companies not to apply these deductibles.

18 Page 18 Recording of this session via any media type is strictly prohibited. Hurricane / Named Storm Deductibles (2) Sandy was downgraded to a post-tropical storm system just before it made landfall in New Jersey. Sandy was not treated as a Hurricane for Insurance Purposes. The Regulators did not overrule the Hurricane Deductible elements in the contracts but rather chose to enforce the Meteorological Assessment that Sandy had ceased to be a Hurricane before landfall.

19 Page 19 Recording of this session via any media type is strictly prohibited. Wind vs. Flood - Policy Structures Quantifying the risk for policies with distinct insurance conditions for different sub-perils (e.g. wind limit and flood sub- limit) requires: financial modeling that explicitly addresses such conditions exposure data representation that explicitly addresses such conditions

20 Page 20 Recording of this session via any media type is strictly prohibited. NYC INFRASTRUCTURE OVERVIEW Key Features of Infrastructure -Coastal development -Development in 100-yr flood plain -Utilities infrastructure is underground – Power, Water, Wastewater -Transportation - Underground subways and the supporting infrastructure

21 Page 21 Recording of this session via any media type is strictly prohibited. INFRASTRUCTURE OVERVIEW – Coastal Development In 1940 Population – 7.5 million Buildings – Lot less than a million In 2013 ( within 100-year Flood Plain) Population – ~5% of 8.2 million Buildings – ~7% of a million Lower Manhattan in 1940’s Lower Manhattan Now

22 Page 22 Recording of this session via any media type is strictly prohibited. INFRASTRUCTURE Utilities – An Underground City -Power lines: 70% of 130,000 miles of transmission & distribution underground -Steam: 105 miles underground pipelines -Gas: 65% of heating and fuels 98% of electricity production -Water: 7000 miles of buried water mains and pipes

23 Page 23 Recording of this session via any media type is strictly prohibited. INFRASTRUCTURE -Transformers vaults with access from sidewalk -Grating Covers

24 Page 24 Recording of this session via any media type is strictly prohibited. INFRASTRUCTURE Transportation -Roadway: 6000 miles -Inter-borough connection: Bridges & Tunnels

25 Page 25 Recording of this session via any media type is strictly prohibited. INFRASTRUCTURE Transportation -Subways: Approx 5.3 million daily rides and approx. 850,000 daily commuter rides into and within NYC

26 Page 26 Recording of this session via any media type is strictly prohibited. BUILDINGS INFRASTRUCTURE Key Features -Buildings with basement (sometimes multiple levels below grade) -PoE of utilities located below grade -Server rooms/ control room located in basement -Sidewalk vault with grating for ventilation -Emergency power: -Fuel tanks located in basement -Emergency Generators higher up

27 Page 27 Recording of this session via any media type is strictly prohibited. CONSTRUCTION TYPES -Brownstone -High-rise

28 Page 28 Recording of this session via any media type is strictly prohibited. KEY ATTRIBUTES Older Buildings -Smaller windows -Heavy Exterior Walls - Masonry or stone veneer -More redundancies in design -Ballast roof -Rooftop equipment unanchored -Water tank

29 Page 29 Recording of this session via any media type is strictly prohibited. KEY VULNERABILITIES Older Buildings -Ballast roof -Rooftop equipment

30 Page 30 Recording of this session via any media type is strictly prohibited. KEY VULNERABILITIES Older Buildings -Rooftop equipment unanchored -Water tank

31 Page 31 Recording of this session via any media type is strictly prohibited. KEY ATTRIBUTES/ VULNERABILITIES Newer Buildings -Structural System – less redundancies -Large Size Windows -Vulnerable Façade System

32 Page 32 Recording of this session via any media type is strictly prohibited. DAMAGE FROM HURRICANE SANDY Flooding

33 Page 33 Recording of this session via any media type is strictly prohibited. DAMAGE FROM HURRICANE SANDY Lower Manhattan in Dark in Aftermath of Hurricane Sandy

34 Page 34 Recording of this session via any media type is strictly prohibited. DAMAGE FROM HURRICANE SANDY Subway Tunnel Flooded

35 Page 35 Recording of this session via any media type is strictly prohibited. DAMAGE FROM HURRICANE SANDY Buildings – High Rise -Flooding -Minimal to no structural damage -Disruption led cash flow losses

36 Page 36 Recording of this session via any media type is strictly prohibited. DAMAGE FROM HURRICANE SANDY Buildings – Single Family Homes -Flooding -Structural damage and/or fallen tree

37 Page 37 Recording of this session via any media type is strictly prohibited. Upcoming Code Upgrades Following Lessons Learned Flood Maps -New FIRMs -Buildings in 100-yr flood zone are mandated to have flood protection plan in place Building Codes -Upgraded NYC Building Code in Oct. 2014

38 Page 38 Recording of this session via any media type is strictly prohibited. Page 38 Challenges with Planning Post-Sandy Heather Roiter Damiano Director of Hazard Mitigation NYC Office of Emergency Management

39 Page 39 Recording of this session via any media type is strictly prohibited. NYC Coastal Storm Plan “Largest and most operational CSP in the country.”

40 Page 40 Recording of this session via any media type is strictly prohibited. CONFIDENTIAL The Story of Sandy

41 Page 41 Recording of this session via any media type is strictly prohibited. CONFIDENTIAL Different Parts of the City Faced Different Types of Flood Hazard Surge and Wave Action Atlantic Coast shorelines faced inundation plus impact wave action  Structures are primarily low-rise residential  Severe structural damage concentrated in areas directly facing shoreline Stillwater Flooding Upper Harbor and other areas to the north generally experienced inundation only  Damage primarily to mechanical, electrical, and telecommunication systems and building contents Stillwater Flooding Surge and Wave Action Upper Harbor Atlantic Coast DOB Tagging by Flood Type and Geography

42 Page 42 Recording of this session via any media type is strictly prohibited. CONFIDENTIAL PlaNYC: A Stronger, More Resilient New York Mayor Bloomberg released 6/11 Offers a roadmap to protect the city against climate hazards and sea level rise Sets City’s priorities and strategies for long- term resiliency Community Recovery Lower Manhattan ; Brooklyn/Queens Waterfront; Southern Brooklyn; South Queens; Mid/South Staten Island Infrastructure and Built Environment 250 specific recommendations nyc.gov/resiliency Coastal protection Buildings Insurance Utilities Liquid Fuels Community Preparedness Healthcare Facilities Telecom Transportation Parks Wastewater and water

43 Page 43 Recording of this session via any media type is strictly prohibited.  Based on the SLOSH* model  A worst-case scenario model that is used for evacuation purposes  A combination of hurricane modeling and evacuation route analysis to produce Zones 1 through 6.  Recently updated (August 2013) to provide more flexibility in evacuation options and reduce confusion with FEMA FIRMs *SLOSH stands for Sea, Lake, and Overland Surges from Hurricanes OEM’s Hurricane Evacuation Map

44 Page 44 Recording of this session via any media type is strictly prohibited. Key functions:  Basis for understanding current flood risk (coastal and riverine)  Inform building code standards  Determine flood insurance requirements NYC’s first FIRMs were issued in 1983  FEMA currently updating NYC’s maps FEMA’s Flood Insurance Rate Maps (FIRMs) FEMA’s flood maps are developed as part of the National Flood Insurance Program.

45 Page 45 Recording of this session via any media type is strictly prohibited. Flood Insurance Rate Maps FEMA’s FIRMs designate flood zones based on different types of hazards. The Base Flood Elevation (BFE) is the height to which the flood waters are expected to rise.

46 Page 46 Recording of this session via any media type is strictly prohibited. NFIP Challenges Pre-Sandy, NFIP was $18B in debt to Treasury ($16B from Katrina) Expected Sandy payouts are $12-15B Subsidized rates do not adequately reflect actual flood risk July 2012: Biggert-Waters Flood Insurance Reform Act Prohibit premium subsidies on new or lapsed policies Phase out subsidies for all policies Require banks to enforce purchase requirements more vigorously Analyze affordability impacts by April 2013 National Flood Insurance Program Reform The NFIP has undergone significant regulatory change over the last 18 months. March 2014: Homeowner Flood Insurance Affordability Act Repeals trigger for new or lapsed policies Caps rate increases at 18% annually (some exceptions) Enables newly mapped properties to purchase preferred risk rate for 1 year Authorizes additional funds for affordability study Provides refunds for certain policies affected by BW-12

47 Page 47 Recording of this session via any media type is strictly prohibited. CONFIDENTIAL Damage outside year floodplain: > 1/3 of red- and yellow- tagged buildings ~ 1/2 of impacted residential units > 1/2 of impacted buildings Flood Insurance Rate Maps Sandy demonstrated that New York was more vulnerable than previously thought. FEMA 1983 FIRMs 100-year Floodplain Sandy Inundation Area (outside the 100-year Floodplain) Source: FEMA (MOTF 11/6 Hindcast surge extent) FEMA 1983 FIRMs vs. Sandy Inundation Area

48 Page 48 Recording of this session via any media type is strictly prohibited. CONFIDENTIAL 100-year Floodplain* 1983 FIRMs 2013 PFIRMs Change (%) Residents218,000398,00082% Jobs214,000271,00027% Buildings36,00068,00089% 1-4 Family26,00053,000104% Floor Area (Sq Ft.) 377M534M42% * Numbers are rounded for clarity Flood Insurance Rate Maps The most recent maps, called Preliminary FIRMs, were released in December 2013 and show a floodplain that is 51% larger than previously. Source: FEMA FEMA 2013 Preliminary FIRMs 100-year Floodplain FEMA 1983 FIRMs 100-year Floodplain FEMA 1983 FIRMs vs. Preliminary FIRMs

49 Page 49 Recording of this session via any media type is strictly prohibited. CONFIDENTIAL * Numbers are rounded for clarity Flood Insurance Rate Maps Given the City’s projections on sea level rise, these floodplains will extend even further by the 2020s and into the 2050s. FEMA 2013 Preliminary FIRMs 100-year Floodplain Projected 2020s 100-year Floodplain Projected 2050s 100-year Floodplain Source: FEMA Source: FEMA; CUNY Institute for Sustainable Cities Projected floodplain for the 2020s and 2050s 100-year Floodplain* 2013 PFIRMs 2050s Projected Change (%) Residents398,000801,00082% Jobs271,000430,00027% Buildings68,000114,00089% 1-4 Family53,000 84, % Floor Area (Sq Ft.) 534M855M42%

50 Page 50 Recording of this session via any media type is strictly prohibited. CONFIDENTIAL Attached 1-2 Family Red Hook, Brooklyn Uninsured Pre-FIRM in 100-year floodplain Lowest floor relative to BFE: -5 Has a basement NA$4,100 Current Scenario New Detached 1-2 Family Gerritsen Beach, Brooklyn Newly mapped Pre-FIRM in 100-year floodplain Lowest floor relative to BFE (new): -9 Has a basement $429$8,045 Detached 1-2 Family Midland Beach, Staten Island Existing Post-FIRM in 100-year floodplain Increase in BFE: 4 Lowest floor relative to BFE (new): -1 $506$2,365 Annual Premiums Existing Pre-FIRM multistory Lowest floor relative to BFE (new): -9 Has a basement unknown Multistory Affordability Challenges The analysis shows that pre- and post-FIRM annual premium increases will be significant due to the implementation of BW-12 and the FIRM update…

51 Page 51 Recording of this session via any media type is strictly prohibited. FEMA, OEM Reduce risk City’s $19.5 Billion plan lays out 257 initiatives to strengthen coastal defenses, improve buildings, protect infrastructure and make neighborhoods safer and more vibrant Improve risk-based pricing: Neighborhood: Army Corps and FEMA do not always agree on flood protection benefits Household: 40% of City’s buildings cannot be elevated; exploring alternative mitigation strategies “Pre-FIRM” construction: Need updated rate-setting methodology for old building stock (focus of the Negatively-Rated Building Study being conducted by the National Academy) Explore data collection options and launch affordability study Working with FEMA and Google on low-cost approaches to gathering elevation data Launching a 10-month study to assess affordability impacts and potential solutions Inform the public: Launching public education campaign regarding risks, mitigation and flood coverage City Efforts and Next Steps: Flood Insurance City is taking steps to reduce risk and increase understanding of its exposure.

52 Page 52 Recording of this session via any media type is strictly prohibited. CONFIDENTIAL  The City Council introduced over 20 bills to address resiliency in 2013  Flood-resistant construction for hospitals and nursing homes  Communicating risk and emergency plans  Fuel storage in flood zone  Building Resiliency Task Force: 33 proposals  Proposed changes to codes  Best practices/guidelines for emergency planning and response  A Stronger, More Resilient New York recommends retroactive requirements for existing large buildings and for hospitals  Enhance protection of mechanical equipment  Avoid long-term operational losses in a future flood event City Efforts and Next Steps: Codes and Standards

53 Page 53 Recording of this session via any media type is strictly prohibited. Property Risk Management with Insurance Property value may decrease due to unforeseen financial or physical loss (ie flooding). Catastrophic damage is of particular concern to risk managers due to severity of loss – may restructure ownership. Property insurance is the primary risk mitigate against catastrophic loss of value. Owner JV Partners Mezzanine Lender Junior Lenders Senior Lenders Property Value Conceptual Real Estate Investment Structure

54 Page 54 Recording of this session via any media type is strictly prohibited. Basic Property Coverage Need for catastrophic coverage (flood, windstorm, earthquake) determined by location and property characteristics. National Flood Insurance Program (NFIP) requires flood coverage through mortgage process. Need for flood coverage usually determined by current Flood Insurance Rate Maps (FIRMS). Windstorm coverage usually included in property policy. Need for earthquake insurance usually determined by Seismic Zone or USGS’s PGA charts. What type and how much property insurance is needed? Property Risk Management with Insurance

55 Page 55 Recording of this session via any media type is strictly prohibited. Windstorm insurance limits usually equal insurable value (IV); no analysis needed. However, hurricane classification may impact coverage. Earthquake limits usually much less than IV; determined by seismic risk or probable maximum loss (PML) analysis. Flood limits usually equal NFIP limits. residential -$250k plus $100k for contents commercial - $500k plus $500k for contents. Flood coverage rarely determined by probable maximum loss (PML) analysis. Property Risk Management with Insurance

56 Page 56 Recording of this session via any media type is strictly prohibited. Flood & Windstorm Risk Management in East Coast Many properties in US high risk flood areas (Special Flood Hazard Areas – SFHAs) rely exclusively on NFIP flood insurance. In many cases, the NFIP limits of $250k for residential and $500k for commercial may be insufficient to cover probable maximum loss. In NYC, property characteristics such as location of mechanical equipment, electrical transformer, back-up power generators, etc. historically not considered in determining flood limits. Current Flood Insurance Rate Maps (FIRMS) or pending maps should be relied upon to determine flood risk. Property management’s ability to manage flood or windstorm restoration also critical in minimizing loss (ie - shortage of restoration contractors, generators, materials after Sandy). Best practice: engage a team and develop a detailed risk management plan before the crisis. Property Risk Management with Insurance


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