Hurricane-Ready: 3 lessons learned in 2021 to prepare for 2022’s storms

By AXA AXL Risk Consulting Regional Engineering Leader Adam Waters

According to the Colorado State University Tropical Meteorology Project, the 2022 Atlantic hurricane season is expected to be more active than usual, calling for 19 named storms, nine hurricanes and four major hurricanes.

How does that stack up to last year? The 2021 Atlantic hurricane season brought 21 named storms — from Ana to Claudette, from Teresa to Wanda — making it the third most active hurricane season ever, and with upwards of $114 billion of insured losses, the third most costly year on record, behind 2017 and 2005.

The most notable of 2021’s storms, hands-down, was Hurricane Ida. Ida was significant for a number of reasons. For one, Ida made landfall in Louisiana as a Category 4 hurricane with sustained winds of 150 mph at landfall, which put it in a tie with the Last Island Hurricane in 1856 and Hurricane Laura in 2020 as the strongest to strike Louisiana, based on windspeed. Ida also tied as the fifth-strongest storm to make landfall anywhere in the United States, based on wind speed.

Ida’s strong winds were accompanied by dangerous storm surge. And, rather than lose strength as it moved inland, it remained dangerous and destructive. Ida traveled more than 1,000 miles and brought catastrophic flooding to the mid-Atlantic, including urban areas like New York City.

Ida spurred a regional tornado outbreak across at least six states. Tornadoes are a typical occurrence resulting from a tropical systems, especially when storms come out of the Gulf of Mexico and travel over land afterward. Tornado touchdowns were recorded from the Mississippi coast to Cape Cod in Massachusetts.

Because of the storm’s death and destruction (some $32 billion of insured losses), the World Meteorological Organization (WMO) Hurricane Committee retired the name “Ida” from the rotating lists of Atlantic tropical cyclone. It was replaced with the name “Imani.”

A storm of Ida’s magnitude always leaves lessons. Here’s some of what businesses should take away from Ida.

1. Prepare for the unexpected
Ida threw a curve ball. Instead of weakening as it moved inland, it maintained its Category 4 strength for six hours after landfall. Its size and the temperature of the ocean water it accumulated at sea made this possible. Under the right conditions, storms can strengthen quickly. In Ida’s case, few expected it to go from a Category 2 with 110 mph winds to a Category 4 with 150+ mph winds in just one day. But it did, and many impacted areas were not prepared for it.

Storms, like Ida, can have far-reaching impacts beyond the area of landfall. Ida’s impact stretched more than 1,000 miles from Louisiana to Maine. The rainfall that Ida dumped on New York, New Jersey and Pennsylvania resulted in historic flooding.

For businesses, Ida pointed to a need to pay greater attention to risks across their property portfolio. While greater focus might have been on facilities nearer a coast during Hurricane season, Ida showed that a facility hundreds of miles away — like landlocked Pennsylvania — could be impacted directly by the storm, or its secondary perils such as the floods and tornadoes that result after the storm.

For businesses with facilities across a wide geography, it can be challenging to perform in-person risk assessments to improve property loss prevention. That’s why AXA XL Risk Consulting developed Risk Scanning. The tool was designed to help companies see the 'big risk picture' and pinpoint potential property exposures across their business locations, taking their loss prevention efforts a step further to be better prepared for an unexpected occurrence, or a big storm like Ida.

Traveling to all of a business' locations to assess property risks is time-consuming, costly, and therefore, very rarely done. Many business may focus their risk assessments and hurricane preparedness planning on a company's primary locations. Smaller facilities, however, may be overlooked. That doesn’t mean they will be ‘overlooked’ by a storm that can leave costly damage.

Based on closed questions asked to risk managers through a digital application, and external data, AXA XL’s risk engineers will analyze the probability of risk incidence, and then propose actions and protection recommendations to mitigate the risks. The service also provides an estimate of the financial impact of various possible loss scenarios on a site before and after the implementation of recommendations. By leveraging both the experience of our consultants and new technologies, Risk Scanning allows for a more thorough, cost-effective assessment across all of a business' properties in a fraction of the time.

The process helps businesses make better decisions, set priorities for their risk management investments. Closer attention to taking precautions, even for the unexpected, can go a long way in lessening impacts to properties and business continuity when it storms.

2. Advance preparedness and recovery may take more time, more money
The global pandemic had a big impact on Hurricane 2021 recovery efforts. Inflation, labor shortages and supply chain disruptions led to higher prices and delays. These issues continue to linger as we move close to 2022 hurricane season.

These issues offer up even more reasons to take preparedness seriously and begin the process earlier than later. Boarding up windows and doors is still a recommended measure for preparing for an impending hurricane. However, with continued disruptions in supply chains, getting the plywood to board up businesses or the generator to keep things running might be more costly or harder to come by, especially if a business waits too long.

Advance preparation has become even more of an imperative. AXA XL Risk Consulting’s property risk engineers work with businesses to help get their operations hurricane-ready long before any storms are on the radar. (Download copies of AXA XL’s Severe weather planning guide and the Severe weather planning checklists here).

Implementing business continuity and emergency plans earlier than usual will help businesses have the items they need on hand well before they are required. And, given supply chain shortage and the tight labor market, finding ways to stave off potential property damage and avoid the need to rebuild can help avoid business interruptions.

Part of advance preparedness should also include making sure property valuations are up-to-date.

According to AXA XL’s Global Chief Underwriting Michele Sansone, “It’s so surprising how often business undervalue their physical operations and properties. An undervaluation can have a big effect on insurance protection, especially under current economic conditions with the rate of inflation as it stands now.”

According to Ms. Sansone, “Not getting accurate Total Insurable Values (TIVs) across our clients’ enterprises is a challenge because it does not allow us to price the risk adequately. In commercial property insurance, TIV is the sum of the full value of a client’s covered property, business income values and any other insured property, like equipment. It’s the collective valuation of the business’ operation. Too often in the annual property underwriting process, TIVs get a passing glance. They are not updated regularly.”

3. Investing in improvements can make a difference
Ida hit 16 years to the day after Hurricane Katrina made landfall in Louisiana. The results were a lot different. What made the difference was an investment in the levee system that protects the city. The $15 billion project took five years to complete and passed its first major test with Ida. Cities along the coasts, especially with low-lying areas, would do well to take note and consider shoring up their infrastructure.

New York City’s aging infrastructure was overwhelmed by Ida’s record setting rainfall. It turned streets into rivers. Millions of gallons of water rushed into the NYC subway system. Residents drowned in illegal basement apartments. Ida made it clear that New York’s infrastructure was out-of-date, especially in a climate where more rainfall has become more prevalent. Recently, the city was awarded $187 million in recovery aid to pay for repairs and infrastructure improvements following Hurricane Ida-related flooding. City officials however also discovered that more regular maintenance of stormwater drains, and sewers could have helped too.

While infrastructure improvements may carry significant price tags, inaction, as seen after storms like Hurricane Ida, carry a high price tag too. Even appropriate maintenance can have a potential impact in controlling losses.

That’s why AXA XL’s property risk engineers, when conducting a risk assessment to help clients better understand their exposures, provide a variety of recommendations to help find ways to fortify facilities and avoid potential storm losses.

Whatever Hurricane season 2022 brings, businesses are wise to learn from last year’s weather events and act now to avoid unnecessary losses.