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Hurricane Laura Damage Could Total Billions

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Experts now project damage figures could be in the billions of dollars as a result of last week’s Hurricane Laura, the category 4 storm that hit several Caribbean nations as well as Louisiana and Texas in the United States.

Laura was the strongest hurricane to hit Louisiana since 1856, but the damage may end up costing less than previous storms because it did not hit heavily populated cities. In 2005, Hurricane Katrina caused $160 billion in damages, while 2017’s Hurricane Harvey cost $125 billion.

Karen Clarke & Company estimated on August 28 that the damage will total almost $9 billion in the United States, and $200 million in the Caribbean, where it hit Antigua, Cuba, the Dominican Republic and Hispaniola.

CoreLogic put the damage in Louisiana at $8 billion to $12 billion, and estimated that the damage in Texas would total less than $500 million. Moody’s Analytics also provided a preliminary damage estimate of between $4 billion and $7 billion.

According to Louisiana news site The Advocate, State Farm, which has around 278,000 policies in Louisiana, said it had received more than 7,000 claims as of last week. The National Flood Service said Friday that FEMA had received nearly 100 claims for damage caused by Laura.

On Thursday, Louisiana officials announced that over 230,000 residents still do not have power, and 175,000 have water outages. As of September 3, 21 Louisiana residents have died related to the storm, with the Louisiana Department of Health reporting that at least 8 deaths were from carbon monoxide poisoning related to improper generator use.

In a new report, Hurricane Season: More Than Just Wind and Water, the Insurance Information Institute said that losses from hurricanes have risen sharply over the past 16 years, growing quicker than inflation by almost 7%. Citing Aon director and meteorologist Dan Hartung, the III reported that “2017, 2018 and 2019 represent the largest back-to-back-to-back insured property loss years in U.S. history.”

The Institute blamed these rising costs on populations moving to more hurricane-prone areas like Florida and Texas, and building bigger, more expensive houses in those areas. When these houses—and the expensive property in them—are damaged, the insurance payouts are higher.

Additionally, hurricanes have brought significantly more water inland as climate change intensifies, the report noted. These factors have all caused more flooding and more insured property damage. The Institute said that rising hurricane losses, plus claims related to the COVID-19 pandemic, will likely translate into insurance rates increasing in the near future.

Texas Study Shows Business Impact of Major Storms

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A new study conducted by Texas A&M University at Galveston and the Texas General Land Office examines the 50-year impact of a major storm hitting Galveston Bay on the Texas coast near Houston, including secondary effects to the economy. The study focused on catastrophic “500-year” flood events (with a one-in-500 chance of occurring in a year), which, while rare, have hit the state 3 times in recent years. This includes Hurricane Harvey, which struck Louisiana and Texas in August 2017, causing $125 billion in damage, according to the National Hurricane Center.

These larger storms have serious economic impacts locally, regionally and nationally. Over a 50-year time frame, the study notes, “the projected economic impact on Texas’ Gross State Product (GSP) of storm surge without coastal protection is substantial.” In the wake of a 500-year magnitude event, the regional petroleum and chemical manufacturing sectors would see their output decline by 19% (or $175.4 billion) in lost revenue, as well as a projected 17% loss of petroleum jobs (approximately 155,000 jobs) and a petroleum price increase of 13%. It would also impact the region’s housing, with the sector declining by 8%, or $39.5 billion lost in sales.

A 500-year surge event striking Galveston Bay would also have serious impacts for national economic activity, especially because the region processes 25% of the petroleum and more than half of the jet fuel used in the United States. According to the study, U.S. GDP could drop 1.1% (approximately $883 billion), U.S. exports would suffer a 4% drop (approximately $1.66 billion) and “30 states not including Texas will have lower GSP in response to a surge event in Texas.”

“The Galveston Bay region is one of the most flood- and surge-prone areas in the United States with vast amounts of vulnerable residential, commercial, industrial and petro-chemical areas at risk,” said Texas Land Commissioner George P. Bush. “This study clearly demonstrates that, without any new protections in place, future storm surges could have substantial and lingering impacts on Texas’ economy and send lasting ripples through other economic sectors nationwide.”

Turning to mitigation, the authors of the report assessed the potential measure of a 17-foot “coastal spine,” also called a “coastal storm suppression system,” made up of “connecting seawalls and fortified dunes/levees along the coastline to retractable gates.” In October, the Army Corps of Engineers released the study Coastal Texas Protection and Restoration Feasibility Study proposing a similar example of this sort of structure—74 miles of barrier, including “floodwalls (inverted T-walls), floodgates (both highway and railroad floodgates), seawall improvements, drainage structures, pump stations, and surge barrier gates.”

The researchers estimate that a coastal spine would reduce the region’s lost petroleum and chemical manufacturing sector losses to 3% and 5%, respectively, a 1% reduction in regional unemployment, and a 1% increase in petroleum product prices. The report also claims that a coastal spine mitigation plan would reduce Houston-Galveston regional insurance premiums by as much as 28%. This could provide significant relief for insurers as well. Even though insurance and reinsurance only covered about 30% of the total wind and flood damage from Hurricane Harvey, this amounted to tens of millions in losses.

In terms of construction cost, the Texas researchers polled residents of three local counties and found that 56% “believed that both government and port industries should be responsible for financing the coastal barrier system,” and a majority agreed that some form of taxation should support its construction.

Looking Back at the Big Flood: Time to Examine Your ‘Human Supply Chain’

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The devastation left behind after Hurricane Harvey is a reminder that people are a critical link in the effort to build community storm resilience. We often remind our customers that to prepare for a disaster, they need to consider their supply chain risk—will they be able to access goods and services in the aftermath of a storm.

One area that is often overlooked is what is often called the human supply chain, which consists of your employees, customers and others members of your community.

Beyond ensuring that your employees are safe, business owners may need to consider other concerns: Do you have a plan that will allow your employees to continue working during the recovery? Can they work remotely? Are your employees trained in disaster preparedness? If your business relies on local customers, are they able to access your goods and services? What about rescue personnel and other business owners that provide goods and services to support the community?
Think of the human supply chain as a network of individuals who help your business to survive and continue to thrive after a disaster, like Hurricane Harvey, which dumped trillions of gallons of water on Texas a year ago.

Ensuring that this living, breathing supply chain remains connected is one of the recommendations culled from 13 in-depth studies that Zurich has produced on the impacts of natural disasters around the world. The latest report, “Houston and Hurricane Harvey: a call to action,” was released at the start of the 2018 hurricane season.

Zurich has developed a methodology called the Post Event Review Capability (PERC), which is an approach to understanding why a hazard becomes a disaster, and then from that, identifying entry points for building resilience.

A report released earlier this month highlights some of the lessons learned from these PERC studies and encourages businesses and communities to focus on resilience to prepare for future storms.

The report identifies some common truths about major storms:

  • Every dollar spent on disaster preparedness saves four dollars in future losses;
  • Early warnings paired with contingency and emergency planning can save lives and protect businesses; and
  • Risk managers and communities must “build back better” to strengthen resilience after a disaster strikes.

The report also emphasizes the human element in storm preparation and recovery. For example, one of the central lessons that emerged from the PERC studies is that successful response operations are mostly reliant on institutions. Providing equipment, access to food and showers, assisting with cleanup and offering paid time off for employees can go a long way towards supporting a community and creating a culture of assistance.

Business leaders should provide employee readiness training, the report concludes. Some companies already do this, making preparedness a part of business as usual. One such company regularly schedules “disaster recovery days.” The company will randomly announce, “It’s flooding today, work from home,” to practice employee readiness for the real thing.

This recognition that humans play a critical role in the recovery process is partly why Zurich continues to support SBP, an organization that seeks to shorten the time between disaster and recovery.

Zurich has worked with SBP since 2009, helping the nonprofit bring hundreds of families back home after Hurricane Katrina. SBP has remained in Southeast Texas since Harvey to help aid in the recovery efforts there.

Recognizing the need for home and business owners to identify and mitigate their risks prior to disasters, Zurich in 2014 committed a $3 million grant to SBP through its Z-Zurich Foundation. The grant helped fund SBP’s Disaster Resilience & Recovery Lab, an initiative through which SBP trains home and business owners in 30 communities at risk for disasters across the United States over the course of three years.

In the future, hurricanes will continue to wreak havoc, destroying homes and lives, damaging critical infrastructure and shuttering businesses, but it’s important to remember that humans are the key to resilience. Keeping people safe, engaged and part of the recovery process can help ensure that communities remain resilient in the face of major storms.

Post-Harvey Lessons For Chemical Plant Managers

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One of the many hazards exposed by Hurricane Harvey occurred in Crosby, Texas, when the Arkema chemical plant suffered fires and small explosions on Aug. 31 and Sept. 1. Floodwaters caused the fires by penetrating the facility and shutting down the cooling systems designed to stabilize 500,000 pounds of highly flammable materials inside. This ultimately caused a mandatory evacuation for all residents within a 1.5-mile radius of the plant. Local news outlets reported that Arkema had no plan in place for six feet of flooding and its last risk assessment was submitted in 2013.

With Hurricane Irma being tracked at 175 miles per hour in the Caribbean, it is possible that chemical plants in the path of destruction—including Florida and the southeastern United States—may face a similar scenario. Regardless of the location of your plant, here are some tips that can help reduce potential business interruption and physical injury during a major natural disaster:

Update your risk assessment. Use Harvey as a catalyst to revisit your risk assessment, especially since new information has emerged about the potential for natural hazards or disasters that can trigger a chemical accident. As recently discussed, the best assessments do more than just feature a column of checked boxes to achieve an organization’s objectives and mitigate business interruption.

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“They prioritize top risks, assign risk ownership, and most critically, integrate risk management and accountability into front line business decision-making,” says Dean Simone, PWC’s U.

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S., Asia-Pacific, and Americas Cluster Risk Assurance Leader.

Submit the assessment to the EPA or other government-appointed body, like your state’s Commission on Environmental Quality. Your facility needs to be able to withstand significant damage to prevent further incidents and public harm. The feedback will hopefully provide some useful criticism to ensure public safety and business continuity.

According to ABC’s Houston affiliate:

In at least one of Arkema’s hazard mitigation plans filed with the federal government, plant officials acknowledged that flooding is a risk. The site sits in a FEMA “high-risk” floodplain that has flooded in the past, leading to a power failure. That time, the site only had six inches of water, a former plant worker said.

It was later revealed in an internal company timeline of events that Arkema did not move temperature-sensitive chemicals via refrigerated trucks and instead banked on its two backup systems, which failed. It seems certain that Arkema will have to consider at least six feet of floodwater when it revises its plan.

Institute an emergency plant management system. This may be included in your company’s risk assessment, and it is important that your employees also know the protocol when it comes to disaster prevention. This includes establishing the lines of authority and communication while on-site and during a catastrophe. OSHA provides guidance for chemical plant management in the event of a mass disaster.

Develop public-facing communications plans. Your communications team, led by an executive officer, should have advisory plans in place in anticipation of, during and following an emergency. The good news is that you don’t have to draft them from scratch. The Centers for Disease Control and Prevention (CDC) offers communications worksheets, templates and guides dedicated to water, sanitation and hygiene-related emergencies and outbreaks. You can customize these documents to reflect your organization’s capabilities and to alert nearby residents and businesses.

Be sure to issue advisories through all possible outlets, including social media. One thing Arkema did correctly was send press releases, incident statements and alerts via Twitter in addition to traditional outlets in order to keep as many people informed as possible.

Communicate with local authorities and emergency workers. All energy plants impact their local communities, surrounding areas and ecosystems. Your company’s hazard plans should be communicated to local fire and police departments and hospitals. This ensures that emergency workers know the potential dangers your plant faces in the event of a disaster and the steps you plan to take to mitigate them.

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