20 August 2015 Insurance

US coastal flood risk on the rise, says RMS

The threat of US coastal flood risk is increasing as rising sea levels drive up expected economic and insurance losses from hurricane-driven storm surge.

This is the finding of catastrophe risk management firm RMS in its latest report, ‘Growing a Profitable Flood Portfolio’.

The firm assessed the flood risk of six US coastal cities: Baltimore, Boston, Miami, New Orleans, New York and Tampa.

By 2100, the sea-level rise near New Orleans is expected to be over 1.3 metres, increasing the chance of catastrophic citywide flooding by more than four times unless improvements are made to raise flood defences by an equivalent height.

Dr Robert Muir-Wood, chief research officer at RMS, said: “Looking forward, New Orleans is faced with a double-whammy. The land on which the city is built is sinking, even faster than the sea levels are rising. As a result, the rise in flood heights is much faster than at any other city along the US coast.”

However, the RMS analysis also found that the chance of a storm surge causing at least $15 billion in economic loss (the amount caused by Hurricane Katrina in 2005) is far lower in New Orleans than other US cities, such as Miami, New York and Tampa, due to significant improvements in flood defences and reduced exposures.

Out of the six cities analysed, Tampa faces the highest risk with a 1-in-80 annual chance of experiencing a $15 billion storm surge loss. Miami faces a 1-in-125 chance, New York a 1-in-200 chance and New Orleans a 1-in-440 chance.

These likelihoods are expected to increase greatly over time also, increasing by up to 350 percent in some cities by 2100.

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