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Caribbean Catastrophes and the Market
Laurie A. Johnson
May 17, 2005
Agenda




RMS CAT Modeling in the Caribbean
2004 CAT Response and Activities to Date
Evaluating the Caribbean Hurricane Model Performance
Next Steps
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Overview of Caribbean Risk
 Considerable variations in risk by peril by island across the
Caribbean:
– Earthquake risk dominated by proximity to the
Caribbean plate boundary
– An average of 9.8 named storms form annually within
the Atlantic and
Caribbean basins with
tracks trending WNW
 Considerable variation in
insurance practices across
the region, including availability,
policy types and deductibles
 Significant amount of risk is
transferred outside the
region through reinsurance
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RMS Caribbean Models
Region
Peril
Original
Release
Last Update
ALM/DLM
and IFM
Caribbean
Hurricane
2000+

Caribbean
Earthquake
1994‡
1995*
1999+
1993‡
1995*
1999+

‡
Puerto Rico
* Jamaica
+ Entire Caribbean basin
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Caribbean Modeling and the 2004 Storms
Category
Saffir-Simpson
Saffir-Simpson
Category
0
0
1
1
2
2
3
3
4
4
5
5
Frances
Jeanne
Charley
0 0
150
150
300
300
600
Miles
600
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Miles
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Ivan
Total Economic Damage in 2004 (by Country)
Insurance Loss Estimates:
Bahamas >$600 Mil
Caymans >$1 Bil
Grenada $100 Mil
Jamaica $500 Mil
Dominican Rep
Puerto Rico
(Source: CDERA, 2004)
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RMS Activities To Date
 CAT Response stochastic storm selections:
– Post-landfall stochastic id’s issued based on best fit of
track and central pressure
– Updated stochastic id’s issued in Feb 2, with events
providing better match of windspeeds at the exposure
concentration:
• For Grand Bahama (Freetown) and Cayman (Georgetown) extreme
concentration of exposure
• Modeled losses very sensitive to stochastic event windfield
parameters
 Bahamas and Caymans reconnaissance
 Island-specific storm surge mapping
 Client claims data collection initiated
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Bahamas: Two Hurricanes Within 3 Weeks,
September 2004
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Frances Damage on Grand Bahama
 Frances crossed Grand Bahama Sept. 3
– Stalled for nearly 2 days while weakening to cat 2 with
103 mph (165 km/hr) sustained winds
• 100 mph (160 km/hr) gust recorded on Grand Bahama
– Major north coast storm surge
 High proportion island’s total insured exposure located in Freeport
(pop 27,000) (west island)
 Widespread low-level roof damage
 Storm surge flooding came
from the north and inundated
airport, commercial and
residential property in north
Freeport and along
the west end
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Jeanne Damage on Abaco
 Jeanne’s eye crossed Abaco 3 weeks later on Sept. 25
– Cat 2 with 103 mph (165 km/hr) sustained winds strengthening to Cat 3
as it passed north
– Storm surge from northeast inundated capital Marsh Harbour (pop
4,000), Treasure Cay, Cherokee Bay
 North coast of outer
Cays subject to wave
action and erosion
causing isolated
building collapses
 Widespread low level
roof damage,
particularly shingles
and clay tiles
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Storm Surge Inundation
zone
Confidential
Bahamas Insights
 Mandatory building code based on South Florida code
 Concrete block construction on the main islands with wood
frame on the outer cays
 First major hurricane to directly hit Grand Bahama since
1960s/70s development of Freeport
– Roof tiles cemented to roofing-felt meant that minor
damage required replacement of all roof covering
 On outer islands demand surge due to increased
transportation and supply costs
 Business interruption and contents policy uptake generally
low reducing insured losses compared to economic
damage
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Hurricane Ivan’s Path Across the Caribbean
 Southernmost cat 4/5 storm
 Struck Grenada directly midday September 7
 Impacted 5 islands in the
southern/eastern Caribbean
and 3 islands in the Northern
Caribbean
 Resulted in 48 lives lost and
multi-billion damages
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Ivan’s Impact on the Cayman Islands
 Ivan tracked just 21 miles (34 km) southwest of Grand Cayman,
borderline category 4  5 , strongest winds directly over the
capital Georgetown (pop 24,000)
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Ivan’s Impact on the Cayman Islands
 Max sustained windspeed (airport) 149mph (240 km/hr)
 Max official gust 171mph (275 km/hr); unofficial recording
190 mph (305 km/hr) on south coast
 Eyewall replacement as RMax jumped from 11 to 23 miles
(18 – 37 km)
 Storm surge 8 – 10 feet (2.4 – 3 m)
– 1st storm surge from northeast
1st wind
– 2nd from south as storm passed
Surge heights
 25% of island flooded
Track
2nd
wind
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Grand Cayman Wind Damage
 Caymans adopted South Florida Building Code in 1992
– Most high value buildings maintained structural integrity
(but were subject to some level of roofing damage)
– Building destruction restricted to older poorer quality
buildings that were generally uninsured
 Out of nearly 90% of properties damaged, only around 5%
destroyed
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Grand Cayman Storm Surge Damage
 Commercial business district in Georgetown not flooded; the
only high exposure area that was not flooded
 Hotels concentrated along Seven Mile Beach sustained
significant flood damage from first surge
– Only 25% hotel rooms restored by January 2005
 10,000 cars flooded
 Southeast facing coastlines suffered damaging wave action from
the 2nd storm surge from the south
– Many buildings demolished at South Shore Road, Bodden
Town, Breakers, East End
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MDR (%)
Evaluating the Caribbean Model’s Performance
Windspeed
Define
Hurricane
Assess
Wind speed
Calculate
Damage
L
O
S
S
 Basin-wide stochastic  Time-stepping
tracks with realistic
windfield calculations  Regional code and
lifetime histories
 Directional factors for
construction variations
 Models clash and risk
surface roughness
 Detailed building inventory
from by-passing
 High-resolution
 Calibrated using claims
storms
topography/land
and engineering studies
cover calculations
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Stochastic Module Robustness
 RMS stochastic tracks represent the actual and potential
correlation of risk between different regions (Clash)
CAT 1/2 storms that
cross Barbados,
Puerto Rico and north
Bahamas
CAT 2/3 storms that
cross the Bahamas
CAT 4/5 storms that
cross Grenada and
Jamaica
CAT 4/5 storms that
cross Grenada,
Jamaica and Caymans
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Hazard Module Evaluation: 100-Year Return Period
Windspeeds (m/sec)
10 min winds at 10m above open water conditions; no roughness and topography factors applied.
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Reconstructing Ivan’s Windfield in the Caymans
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Storm Surge Mapping: Inundation vs. Wave Action
Grand Caym an - Modeled Surge vs 3-sec WS
35
Surge HT (ft)
30
Water Level (ft)
Ivan
mid S coast
Total Water HT(ft)
(including waves)
25
20
15
10
5
0
0
20
40
60
80
100 120 140 160 180 200
3 sec Wind Speed (m ph)
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220 240 260 280
Storm Surge Modeling: Reconstructing Ivan’s Surge
on the Caymans
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Storm Surge – Understanding Risk by Territory
Dominican Republic
Population: 8,950,034
Total Area: 48,730 sq km
Highest point: Pico Duarte 3,175 m
Nassau
Dominican Republic
The Bahamas
Population: 301,790
Total Area: 13,940 sq km
Highest point: Mount Alvernia,
on Cat Island, 63 m
Eleuthera
Andros
The Bahamas
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Next Steps
 Detailed post-mortem on 2004 Caribbean claims and losses:
– Analysis by occupancy, building type, age, materials of
construction, distance to coast, BI etc.
– Differentiate between flood and wind claims at high resolution
– Collect high-windspeed data useful for U.S. calibration as well
 Initiating the 2006 Upgrade:
– Residential and commercial vulnerability calibration
– Addition of storm surge modeling
– Caribbean Industry Exposure Data
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