2017 was a year of records for sure.  Most notably, professional eater Joey Chestnut set a new record by eating 55 glazed doughnuts in eight minutes.[1] At a university in Ohio, 972 people set a record by dressing as penguins.[2]  And, Ayanna Williams of Texas set a record thanks to her fingernails reaching a combined total length of 18 feet, 10.9 inches.[3] Unfortunately, the U.S. also set a record in 2017 with a total of $306 billion in damage resulting from several natural disasters. In fact, the 2017 season was the first time that three Category 4 hurricanes — Harvey, Irma, and Maria — made landfall in the United States and its territories in a one-year period.

 

Other extreme weather events contributed to making 2017 the most expensive year on record for natural disasters. In all, there were 16 natural disasters, each causing more than $1 billion worth of damage. Three of those natural disasters were hurricanes.  In August 2017, Hurricane Harvey[4] was responsible for approximately $180 billion in damage and was the costliest tropical cyclone on record, inflicting widespread flooding in the Houston metropolitan area. This historic rainfall caused massive flooding that displaced over 30,000 people and damaged or destroyed over 200,000 homes and businesses. In September 2017, Hurricane Irma brought numerous impacts to the Florida Keys and parts of Georgia and Alabama, including significant property damage, widespread downed trees, and power outages causing damages approximating $50 billion.[5] Also in September 2017, Hurricane Maria[6] was responsible for at least another $100 billion in damage and was the worst hurricane in Puerto Rico’s history.  Hurricane Maria wiped out most of Puerto Rico’s transportation and communication systems as well as the electrical grid. It also destroyed numerous buildings and homes. Each of these destructive superstorms now joins Katrina and Sandy in the new top 5 costliest U.S. disaster events on record.[7]

 

In addition to the hurricanes, the autumn wildfires in California contributed another $18 billion in damage and destroyed over 15,000 homes, businesses and other structures. Not to be outdone, Mid-West hailstorms in March, May, and June caused over $8 billion in damage. Oh, and don’t forget about the string of tornadoes that caused damage in excess of $3 billion.

 

NOAA / Via ncdc.noaa.gov                               

Although devastating weather is natural, many scientists say climate change exacerbated the damage.[8]  According to NOAA, the United States experienced its third-warmest year on record in 2017.[9] Assuming this trend continues, home and business owners, as well as insurers, can probably expect similar weather patterns in 2018, making extreme weather events the “new normal.” Insurers will also likely have to factor these “new normal” weather patterns into their computer models when assessing risks going forward.

 

Not surprisingly, 2017 also saw a record high of personal and commercial lines claims as a result of these natural disasters.[10]  Assessing the extent of the damage from the 2017 disasters will take time.  But given the catastrophic nature of the claims and likelihood of a “total loss,” insurers can expect to encounter various coverage issues pertaining to valuation, increased cost of construction and code upgrades, business interruption, and the theoretical period of indemnity associated with rebuilding the damaged property.  The recent series of wildfires could also raise issues concerning the number of occurrences and deductibles as well as ingress and egress.  Whether these insurance claims also result in a record high number of lawsuits disputing these coverage issues will play out in the coming months.  Perhaps, a new record for the most lawsuits filed in any given year will be set in 2018.

---