AIR Worldwide estimates that property losses from the flooding in Texas caused by Hurricane Harvey’s record-breaking rainfall will be between $65 billion and $75 billion. These figures include damage to all properties eligible for coverage regardless of whether they are actually insured and without any application of deductibles or limits. Note that these estimates do not include losses from Harvey’s winds or storm surge.
Industry insured losses from wind, flood, and storm surge combined are expected to exceed $10 billion. Note that these estimates do not include losses to the National Flood Insurance Program (NFIP).
Property loss estimates for flooding from Harvey capture losses from inland flood both on and off the floodplain based on simulated event scenarios that reflect uncertainty in precipitation observations, river flows, and modeled levee failures. Included in the estimates are onshore residential, commercial, and industrial properties and their contents, automobiles, and time element coverage (additional living expenses for residential properties and business interruption for commercial properties; the estimates do not, however, include contingent business interruption losses resulting from the closure of oil refineries in the region). See below for additional information.
AIR’s property loss estimates for flooding from Harvey reflect:
- Insurable physical damage to property (residential, commercial), both structures and their contents, and auto
- Direct business interruption losses
- Demand surge—the increase in costs of materials, services, and labor due to increased demand following a catastrophic event
The property loss estimates for flooding from Harvey do not reflect:
- Losses to land
- Losses to infrastructure
- Losses to CAR/EAR, Marine Hull, or Marine Cargo lines of business
- Indirect business interruption losses
- Loss adjustment expenses
After making landfall as a Category 4 hurricane near Rockport, Texas, on Thursday, August 24, hovering over Texas for the next 5 days, and then travelling through western Louisiana the following week, Harvey was downgraded to a remnant low over the weekend of September 2–3; it then moved into the Ohio Valley and dissipated. It had been almost a decade since the last hurricane landfall in Texas—Hurricane Ike in 2008—and the last Category 4 storm to impact the state was Hurricane Carla in 1961. The last Category 4 hurricane to make landfall anywhere in the U.S. was Charley in 2004, which struck southwestern Florida.
Harvey brought excessive, indeed record-breaking rainfall; 51.88 inches were recorded in Cedar Bayou near Houston, which shattered the previous 48-inch rainfall record from any tropical storm or hurricane in the contiguous United States set by Tropical Storm Amelia in 1978 in Medina, Texas. The National Weather Service in Houston officially recorded 43.38 inches and 32.47 inches were recorded at Houston Hobby Airport, which exceeded the previous 3-day record for any major U.S. city. In Beaumont, 26.03 inches of rain were recorded on Tuesday, August 29, more than doubling its prior daily rainfall record of 12.76 inches set in 1923; the rainfall total there has been reported as 47.35 inches. As of Wednesday, more than five stations across southeastern Texas had surpassed 45 inches of rainfall. Reports indicate that Harvey dropped a total of 27 trillion gallons of rain on Texas and Louisiana in 6 days.
More than half of the 120 river gauging stations in the Houston/Galveston area were in various stages of flooding during the event; several experienced major flood stages and crested with new record-setting flood levels. Buffalo Bayou, which flows through downtown Houston, crested at 63.5 feet—2 feet higher than the previous historical record of 61.2 feet set in 1992. Cypress Creek, which flows through neighborhoods north of downtown Houston, crested about 3 feet higher than the previous record of 94.3 feet set in 1949. Similarly, Neches River at Beaumont crested at 21.5 feet, about 10 feet higher then the previous record set in 2006. Flood levels corresponded to astounding 750-, 200-, and 100-year return periods for river water level stages on Cypress Creek near Westfield, Greens Bayou near Houston, and on West Fork San Jacinto River near Porter, Texas.
Tom Bossert, homeland security adviser to the President, said that Harvey has damaged or destroyed about 100,000 homes. Homes in and around Houston were under 3 or 4 feet of water, overtaken by river and bayou flooding, with some residents reporting waterlines at more than 6 feet in their flood-damaged properties. Schools are also waterlogged, with a reported 53 damaged by inundation. In Wharton, the overflow from Houston has traveled southward and flooded homes. Mold and mildew have been reported by returning homeowners as they begin cleaning up, stripping interiors of properties to the studs and tossing out everything from photo albums to furniture to appliances. Much of the affected area is still flooded, although waters have receded in some locations.
Several oil and chemical facilities were shut down in Texas as a result of Harvey. Akin to a plane taking off and landing, the risk to human life in a chemical plant is greatest during start-up and shutdown. In anticipation of an incident, the U.S. Chemical Safety and Hazard Investigation Board (CSB) released a safety alert. Restarting after emergency shutdown will take place over the coming weeks and months, during which multiple issues may arise:
- Rotating equipment (such as compressors, pumps, turbines, motors, and engines) affected by floodwater may have lost lubrication and could experience difficulty starting up.
- Sensors affected by floodwater may not detect faults in machinery, causing plant personnel to push equipment to their limit
- Some petrochemical machinery that operates at very high temperatures may have been shut down in an uncontrolled manner, thermally shocking equipment and compromising its integrity, thus creating the potential for flammable gas releases, leaks, explosions, fires, etc.
- Plants that lost power may have lost refrigeration that keeps volatile chemicals refrigerated, which could in create explosion potential
The Texas Commission on Environmental Quality (TCEQ) has received numerous wastewater overflow notices from petrochemical and sewage treatment plants. During unplanned shutdowns, facilities will emit volatile chemicals in amounts that far exceed air pollution permit levels; flaring may be used to reduce the amount of hazardous chemicals that go into the air in some cases, according to Chemical & Engineering News. Twenty-four state-operated air quality monitors in Houston were taken offline before Harvey struck to prevent damage, which has reduced knowledge of air quality in the Houston area.
As of September 2, the EPA determined that 28 superfund sites—polluted sites that require long-term responses to clean up hazardous material—did not show signs of damage or excessive flooding due to Harvey. Sites that have been flooded and/or damaged by the storm number 13; two do not require emergency clean-up and 11 are inaccessible.
AIR loss estimates
AIR’s property loss estimates for flooding from Harvey capture losses from inland flood both on and off the floodplain based on simulated event scenarios that reflect uncertainty in precipitation observations, river flows, and modeled levee failures. These loss estimates were derived based on AIR’s high-resolution Industry Exposure Database for the United States and damage ratios estimated from reported flood inundation.
The range in AIR’s loss estimates also reflects uncertainty in the payment of additional living expenses resulting from relocation, time spent in secondary housing, lost wages, loss of electricity, and damage to contents. Please note that total economic losses are expected to be higher than industry insurable loss estimates.
The modeled hazard intensities reflect the maximum estimated river flows and maximum excess runoff intensities during the event from August 25–31, 2017. Note that many reinsurance contracts are subject to an hours clause (typically 168 hours for flood events). Given the duration of this event, AIR expects the flood to be treated as a single occurrence in Texas.
The AIR tropical cyclone, flood, and liability teams are continuing to monitor the aftermath of Harvey and will provide updates as warranted.