CoreLogic’s New 2021 Hurricane Report Shows Climate Change Impact

Recent years have seen increase in hurricanes and subsequent flood damage to property throughout the U.S. due to climate change. CoreLogic^® a leading global property information, analytics and data-enabled solutions provider, this week released its 2021 Hurricane Report, providing analysis of single- and multifamily residences along the Gulf and Atlantic coasts and revealing nearly 8 million homes with more than $1.9 trillion in combined reconstruction cost value (RCV) are at risk of storm surge. This year’s report also examines hurricane wind and reveals more than 31 million homes with nearly $8.5 trillion in combined RCV have moderate or extreme risk exposure to hurricane winds.

The report takes a look at the impact of climate change, zeroing in on the U.S. housing economy after hurricane tears through a community. What researchers learned was that there was a significant spike in mortgage delinquency rates and loss in housing inventory, according to Frank Nothaft, Chief Economist at CoreLogic. Those communities with the most delinquency and most affected financially are primarily those with already-high delinquency rates such as Lake Charles, Louisiana, which were deeply affected by the pre- and post-Hurricane Laura landfall rates.

After 30 named storms, a record-high in the 2020 Atlantic hurricane season with the larger looming impact of climate change, CoreLogic is urging insurers and lenders to prepare for an unpredictable season by shifting the focus from loss adjudication to loss prevention and avoidance, according to company materials. To help mitigate the effects of hurricanes and other natural disasters, it is important to support community resilience goals and understand the risk faced by those impacted. People need to understand that while they may not have been affected before, they may be in the path of danger in the future.

Hurricanes are being affected greatly by climate change so that their characteristics are no longer the same as they once were. There is an increase in frequency and severity of hurricanes with damaging wind, storm surge and flooding that will result in the perpetuation of property losses and increased financial implications on the insurance industry. Most standard homeowners insurance policies will cover wind damages, not all policies cover flood. Adoption inside the Special Flood Hazard Areas (SFHA) designated by FEMA is strong, but it’s rarely purchased outside of those zones. In fact, CoreLogic studies have shown that up to 70% of the damages from flood to homes is uninsured.

This is another reason that homeowners need to be educated to understand that they could be left with little or no protection in recovery from ever more severe hurricane seasons. Lower income communities have a harder time recovering from disaster and live with long lasting, compounding effects. Homes that are damaged and sometimes unsuitable for habitation, can shape communities with unexpected expenditures of new living situations and workplaces that may be damaged, making income earning difficult.

Gulf and Atlantic Coasts Storm Surge and Hurricane Wind Risk Levels

In their report, CoreLogic evaluated the storm surge and hurricane wind risk levels for both single-family (SFR) and multifamily (MFR) residences along the Gulf and Atlantic coasts, from Texas up to Maine,  for the 2021 hurricane season. Analysis includes the total estimated reconstruction cost value (RCV), which is calculated using the combined cost of construction materials as well as equipment and labor assuming total (100%) destruction of the property.

Metros At Risk

CoreLogic looked at the top 15 metropolitan areas with the greatest number of SFR and MFR homes at risk for storm surge and wind damage. The review of the risk counts tells the story of varying risk profiles in the communities we reside in:

• The New York, New York metro area has the greatest risk with 890,430 homes with over $356 billion RCV at risk for storm surge and over 3.8M homes with over $1.6 trillion RCV at risk for hurricane wind.
• The Miami, Florida metro area that includes Miami, Ft. Lauderdale, and West Palm Beach follows the New York Metro area with more than 767,741 homes with over $156 billion RCV at risk for storm surge and over 2M homes with over $422 billion RCV at risk for hurricane wind.
• At a state level, Florida, Louisiana and New York have the greatest number of homes at risk of storm surge and hurricane winds.

It’s important to note that the analysis of the 2021 Hurricane Report focuses on single family residential structure of less than four stories, including mobile homes, duplexes, manufactured homes and cabins (among other non-traditional home types. These types of homes generally suffer more damage than build homes. Also included are multi-family structures such as apartments, condominiums and multi-unit dwellings.

High rise residential buildings such as condominiums and apartments may skew both the numbers associated with the storm surge risk, because only the lower levels of the units are likely to be affected, and the higher levels will not often be damaged by storm surge.

RCV Calculations

Using year-over-year changes in data comparisons is not entirely accurate because you have changes in the number of homes at risk, with the RCV the result of multiple variables, such as new home construction, improved public records, enhanced modeling techniques, fluctuation of labor, equipment and material costs and even a potential rise in the sea level.

CoreLogic uses its RCV methodology to estimate the cost of rebuilding the home in the event of a total loss and not influenced by property market values or new construction cost estimation. The more accurate reconstruction cost estimates reflect the actual cost of damage or destruction of residential buildings that are predicted to occur from hurricane-driven storm surge and wind. These include the cost of materials, equipment and labor needed to rebuild. At this time these estimates can also take into account geographic pricing differences, (without including the actual land values).

The report’s values are based on 100% damage to the residential structure (considered “total”). If there is less than 100% damage to a residence from a storm surge, then there would be a lower realized RCV.

“Resilience can be thought of as our ability to recover quickly after a shock, and because we cannot alter the frequency and severity of natural catastrophes, the continuity of our financial system relies upon the expectation of resilient communities,” said Tom Larsen, Principal, Insurance Solutions at CoreLogic. “The current focus is on anticipating what challenges to resilience will be confronting us in the future – a future where we expect more damaging events.”

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Categories: analytics, asset management, Big Data, climate change, cloud, cloud network analytics, CoreLogic, data, disaster relief, emergency response, field GIS, geocoding, geospatial, GIS, government, insurance, location based sensor fusion, location based services, location intelligence, mapping, public safety, spatial data, storm surge, subsurface utilities, utilities

This entry was posted on Friday, June 4th, 2021 at 8:52 am. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.