hurricane sandy response and aftermath - the new reality of natural hazard risk
DESCRIPTION
HURRICANE SANDY RESPONSE AND AFTERMATH - The New Reality of Natural Hazard Risk. Savita Goel, WDP & Associates Heather Roiter Damiano , NYC Office of Emergency Management David F Smith, EQECAT Damian Wach, Prudential Mortgage Capital Company. April 29, 2014. LEARNING OBJECTIVES. - PowerPoint PPT PresentationTRANSCRIPT
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HURRICANE SANDY RESPONSE AND AFTERMATH- The New Reality of Natural Hazard Risk
April 29, 2014
Savita Goel, WDP & AssociatesHeather Roiter Damiano, NYC Office of Emergency ManagementDavid F Smith, EQECATDamian Wach, Prudential Mortgage Capital Company
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• Assess how natural hazards and their threat to your organization
have changed.• Lessons learned from the vantage point of key players in post-
event response • Incorporate your peers’ life-lesson adjustments into your own
natural disaster response program
LEARNING OBJECTIVES
April 29, 2014
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• Introduction to Speakers • Hurricane Sandy and CAT Modelling• Overview of NYC Infrastructure• Key Characteristics and Vulnerabilities• Aftermath of Hurricane Sandy• Challenges with Planning Post-Sandy • Risk Manager’s outlook• Discussion on Lessons Learned• Q&A
OUTLINE
April 29, 2014
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Introduction to Speakers - Savita Goel, WDP- David Smith, EQECAT- Heather Roiter, NYC OEM- Damian Wach, Prudential
INTRODUCTIONS
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Superstorm Sandy - Highlights• Cat 1 (80 mph 1-minute) at Atlantic City, NJ landfall• Very broad windfield
o ~1000 mile diameter of tropical storm force windso Rmax significantly larger than 1938 stormo ~$ 20 trillion in insurable assets in affected states
• Very low pressure (948 mb recorded at Atlantic City)• Surge heights:
o ~14 feet in lower Manhattan: extremeo ~9 feet at Atlantic City: not as exceptional but still very damaging in portions of the NJ
coast
• Rainfall amounts and rates ~ lower than Ireneo Much less inland flooding
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Superstorm SandySuperstorm Sandy Track
Historic Tracks1903 was only event that directly struck NJ coast (Cat 1, transitioning)
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Modeled landfall frequencies (long term):• Virginia – Maine ~ 1 / 8 years• New York ~ 1 / 20 years• New Jersey ~ 1 / 180 years
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Boston
New York
Philadelphia
Washington
Baltimore Atlantic City
Sandy-2012
1938 Long
Island Express
Irene
-201
1
Storm Name
Intensity (mph)
Rmax (km)
Forward Speed
(km/hr)
1938 98 95 65
Irene (NJ) 65 74 29
Sandy 80 110 37
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Reported• Atlantic City, NJ - 77 mph • Cape May, NJ - 73 mph• Clifton, NJ - 80 mph• Coney Island, NY - 69• Dennisville (Near Cape May) - 81 mph• Greenwich, CT - 70 mph• Islip Airport , NY- 90 mph• JFK Airport , NY– 79 mph• Montclair, NJ - 88 mph• New Haven, CT - 85 mph• Newark Airport, NJ - 78 mph• Ocean City, NJ - 60 mph• Sandy Hook, NJ - 87 mph (it is a buoy)• Sandy Hook, NJ (onshore) - 81 mph• Surf City (Ocean County), NJ - 89 mph• Tompkinsville, NY – 90 mph• White Plains Airport, NY – 72 mph
Philadelphia
Baltimore
Washington
New York
Boston
77
7360
72
807285
78
70
90
87
89
90
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Surge - Enhancing Factors
• Higher Winds
• Lower Pressure
• Faster Translation Speed
• Perpendicular Landfall
• Wider Storm - More Area Affected
• Shallow Offshore Slope
• Confining Coastline Geometry
• Peak Surge occurring at High Tide
• Higher Astronomical Tide (Full/New Moon)
Factors enhancing Sandy’s Surge at Landfall
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Surge – Coastline GeometryNY Bight:
The “corner” where NJ and NY meet at approximately 90º.
Sandy’s track allowed for a long duration of winds directing water into Raritan Bay and NY Harbor.
L
Water can be funneled into the corner and pile up with nowhere to go but up.
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Battery Park NYC – Storm Tide
Storm Surge
Normal Tide
Resulting Storm Tide
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Superstorm Sandy – Loss Estimates
NJ
30%
NY 34%
PA
20%
Others 16%
Residen-tial 60%
Com-mer-
cial40%
Losses By State
Losses By Line of Business
• The estimated economic loss for this event is about $30 to $50 Billion
• Based on the event footprint and EQECAT IED, the post-landfall (Nov. 1, 2012) insured loss estimate for Sandy is approximately $10 to $20 Billion (Later revised to $15-$20 Billion)
• Latest PCS: $18.75 Billion• ~1-in-10 for U.S.• ~1-in-70 for Northeast (VA-
ME)
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Residential flood insurance take up rates in New York in 2010 with Sandy storm surge estimates
Source: Resources for the Future, with data from FEMA
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Residential flood insurance take up rates in New Jersey in 2010 with Sandy storm surge estimates
Source: Resources for the Future, with data from FEMA
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Flood Damage• The National Flood Insurance Program (NFIP) reports that for
a 1-story building, the average cost to replace by flooding height is:
1 foot - 22% 2 feet - 32% 6 feet - 58%8 feet - 68%
• NFIP reports that 25 to 30 percent of all paid losses were for damage in areas not officially designated at the time of loss as special flood hazard areas. (NFIP coverage is available outside high-risk zones at a lower premium.)
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Hurricane / Named StormDeductibles (1)• Special hurricane deductibles had been introduced in 10 of
the states affected by this event (DE, MA, MD, ME, NC, NY, RI, SC, VA), increasing the portion of hurricane damage that is the responsibility of policy holders.
• Hurricane deductibles are separate thresholds that damage must exceed before insurers will indemnify losses. Hurricane deductibles of from 1% to 5% of the structure replacement value are not uncommon. Some hurricane deductibles have Cat 2 or 3 thresholds.
• Insurance Commissioners and Governors were quick to instruct companies not to apply these deductibles.
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Hurricane / Named StormDeductibles (2)• Sandy was downgraded to a post-tropical storm system just
before it made landfall in New Jersey. • Sandy was not treated as a Hurricane for Insurance Purposes.
The Regulators did not overrule the Hurricane Deductible elements in the contracts but rather chose to enforce the Meteorological Assessment that Sandy had ceased to be a Hurricane before landfall.
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Wind vs. Flood - Policy StructuresQuantifying the risk for policies with distinct insurance conditions for different sub-perils (e.g. wind limit and flood sub-limit) requires:
• financial modeling that explicitly addresses such conditions• exposure data representation that explicitly addresses such conditions
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NYC INFRASTRUCTURE OVERVIEW
Key Features of Infrastructure
- Coastal development- Development in 100-yr flood plain - Utilities infrastructure is
underground – Power, Water, Wastewater
- Transportation - Underground subways and the supporting infrastructure
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INFRASTRUCTURE OVERVIEW – Coastal Development
In 1940Population – 7.5 millionBuildings – Lot less than a million
In 2013 (within 100-year Flood Plain)Population – ~5% of 8.2 millionBuildings – ~7% of a million
Lower Manhattan in 1940’s Lower Manhattan Now
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INFRASTRUCTURE
Utilities – An Underground City
- Power lines: 70% of 130,000 miles of transmission & distribution underground
- Steam: 105 miles underground pipelines- Gas: 65% of heating and fuels 98% of
electricity production- Water: 7000 miles of buried water mains
and pipes
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INFRASTRUCTURE
- Transformers vaults with access from sidewalk
- Grating Covers
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INFRASTRUCTURE
Transportation
- Roadway: 6000 miles - Inter-borough
connection: Bridges & Tunnels
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INFRASTRUCTURE
Transportation
- Subways: Approx 5.3 million daily rides and approx. 850,000 daily commuter rides into and within NYC
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BUILDINGS INFRASTRUCTURE
Key Features
- Buildings with basement (sometimes multiple levels below grade)
- PoE of utilities located below grade- Server rooms/ control room located in
basement- Sidewalk vault with grating for
ventilation- Emergency power:
- Fuel tanks located in basement- Emergency Generators higher up
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CONSTRUCTION TYPES
- Brownstone - High-rise
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KEY ATTRIBUTES
Older Buildings
- Smaller windows- Heavy Exterior Walls -
Masonry or stone veneer - More redundancies in design- Ballast roof- Rooftop equipment unanchored- Water tank
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KEY VULNERABILITIES
Older Buildings - Ballast roof- Rooftop equipment
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KEY VULNERABILITIES
Older Buildings - Rooftop equipment unanchored- Water tank
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KEY ATTRIBUTES/ VULNERABILITIES
Newer Buildings - Structural System – less
redundancies- Large Size Windows - Vulnerable Façade System
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DAMAGE FROM HURRICANE SANDY
Flooding
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DAMAGE FROM HURRICANE SANDY
Lower Manhattan in Dark in Aftermath of Hurricane Sandy
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DAMAGE FROM HURRICANE SANDY
Subway Tunnel Flooded
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DAMAGE FROM HURRICANE SANDY
Buildings – High Rise
- Flooding - Minimal to no structural
damage- Disruption led cash flow
losses
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DAMAGE FROM HURRICANE SANDY
Buildings – Single Family Homes- Flooding - Structural damage and/or
fallen tree
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Upcoming Code Upgrades Following Lessons Learned
Flood Maps - New FIRMs - Buildings in 100-yr flood zone are mandated to have flood
protection plan in place
Building Codes- Upgraded NYC Building Code in Oct. 2014
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Challenges with Planning Post-Sandy
Heather Roiter DamianoDirector of Hazard Mitigation
NYC Office of Emergency Management
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NYC Coastal Storm Plan“Largest and most operational CSP in the country.”
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CONFIDENTIAL
The Story of Sandy
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CONFIDENTIAL
Different Parts of the City Faced Different Types of Flood Hazard
Surge and Wave ActionAtlantic Coast shorelines faced inundation plus impact wave action Structures are primarily low-rise
residential
Severe structural damage concentrated in areas directly facing shoreline
Stillwater FloodingUpper Harbor and other areas to the north generally experienced inundation only Damage primarily to mechanical,
electrical, and telecommunication systems and building contents
Stillwater FloodingSurge and Wave Action
Upper Harbor
Atlantic Coast
DOB Tagging by Flood Type and Geography
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CONFIDENTIAL
PlaNYC: A Stronger, More Resilient New York
Mayor Bloomberg released 6/11Offers a roadmap to protect the city against
climate hazards and sea level riseSets City’s priorities and strategies for long-
term resiliencyCommunity Recovery
• Lower Manhattan ; Brooklyn/Queens Waterfront; Southern Brooklyn; South Queens; Mid/South Staten Island
Infrastructure and Built Environment250 specific recommendations
nyc.gov/resiliency
Coastal protectionBuildingsInsuranceUtilitiesLiquid FuelsCommunity PreparednessHealthcare FacilitiesTelecom
TransportationParksWastewater and water
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Based on the SLOSH* model
A worst-case scenario model that is used for evacuation purposes
A combination of hurricane modeling and evacuation route analysis to produce Zones 1 through 6.
Recently updated (August 2013) to provide more flexibility in evacuation options and reduce confusion with FEMA FIRMs
*SLOSH stands for Sea, Lake, and Overland Surges from Hurricanes
OEM’s Hurricane Evacuation Map
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Key functions: Basis for understanding
current flood risk (coastal and riverine)
Inform building code standards
Determine flood insurance requirements
NYC’s first FIRMs were issued in 1983
FEMA currently updating NYC’s maps
FEMA’s Flood Insurance Rate Maps (FIRMs)FEMA’s flood maps are developed as part of the National Flood Insurance Program.
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Flood Insurance Rate MapsFEMA’s FIRMs designate flood zones based on different types of hazards.
The Base Flood Elevation (BFE) is the height to which the flood waters are expected to rise.
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NFIP Challenges • Pre-Sandy, NFIP was $18B
in debt to Treasury ($16B from Katrina)
• Expected Sandy payouts are $12-15B
• Subsidized rates do not adequately reflect actual flood risk
July 2012: Biggert-Waters Flood Insurance Reform Act
• Prohibit premium subsidies on new or lapsed policies
• Phase out subsidies for all policies
• Require banks to enforce purchase requirements more vigorously
• Analyze affordability impacts by April 2013
National Flood Insurance Program ReformThe NFIP has undergone significant regulatory change over the last 18 months.
March 2014: Homeowner Flood Insurance Affordability Act
• Repeals trigger for new or lapsed policies
• Caps rate increases at 18% annually (some exceptions)
• Enables newly mapped properties to purchase preferred risk rate for 1 year
• Authorizes additional funds for affordability study
• Provides refunds for certain policies affected by BW-12
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CONFIDENTIAL
Damage outside 1983 100-year floodplain:
• > 1/3 of red- and yellow-tagged buildings
• ~ 1/2 of impacted residential units
• > 1/2 of impacted buildings
Flood Insurance Rate MapsSandy demonstrated that New York was more vulnerable than previously thought.
FEMA 1983 FIRMs 100-year Floodplain
Sandy Inundation Area (outside the 100-year Floodplain)
Source: FEMA (MOTF 11/6 Hindcast surge extent)
FEMA 1983 FIRMs vs. Sandy Inundation Area
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CONFIDENTIAL
100-year Floodplain*
1983 FIRMs
2013 PFIRMs
Change (%)
Residents 218,000 398,000 82%
Jobs 214,000 271,000 27%
Buildings 36,000 68,000 89%
1-4 Family 26,000 53,000 104%
Floor Area (Sq Ft.) 377M 534M 42%
* Numbers are rounded for clarity
Flood Insurance Rate MapsThe most recent maps, called Preliminary FIRMs, were released in December 2013 and
show a floodplain that is 51% larger than previously.
Source: FEMA
FEMA 2013 Preliminary FIRMs 100-year Floodplain
FEMA 1983 FIRMs 100-year Floodplain
FEMA 1983 FIRMs vs. Preliminary FIRMs
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CONFIDENTIAL
* Numbers are rounded for clarity
Flood Insurance Rate MapsGiven the City’s projections on sea level rise, these floodplains will extend even further by
the 2020s and into the 2050s.
FEMA 2013 Preliminary FIRMs 100-year Floodplain
Projected 2020s 100-year Floodplain
Projected 2050s 100-year Floodplain
Source: FEMASource: FEMA; CUNY Institute for Sustainable Cities
Projected floodplain for the 2020s and 2050s
100-year Floodplain*
2013 PFIRMs
2050s Projected
Change (%)
Residents 398,000 801,000 82%
Jobs 271,000 430,000 27%
Buildings 68,000 114,000 89%
1-4 Family 53,000 84,000 104%
Floor Area (Sq Ft.) 534M 855M 42%
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CONFIDENTIAL
Attached 1-2 FamilyRed Hook, Brooklyn Uninsured Pre-FIRM in 100-year floodplain
• Lowest floor relative to BFE: -5• Has a basement NA $4,100
CurrentScenario New
Detached 1-2 FamilyGerritsen Beach, Brooklyn Newly mapped Pre-FIRM in 100-year floodplain
• Lowest floor relative to BFE (new): -9• Has a basement $429 $8,045
Detached 1-2 FamilyMidland Beach, Staten Island
Existing Post-FIRM in 100-year floodplain• Increase in BFE: 4• Lowest floor relative to BFE (new): -1
$506 $2,365
Annual Premiums
Existing Pre-FIRM multistory• Lowest floor relative to BFE (new): -9• Has a basement
unknownMultistory
Affordability ChallengesThe analysis shows that pre- and post-FIRM annual premium increases will be significant due to the implementation of BW-12 and the FIRM update…
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Reduce risk • City’s $19.5 Billion plan lays out 257 initiatives to strengthen coastal defenses, improve
buildings, protect infrastructure and make neighborhoods safer and more vibrant
Improve risk-based pricing:• Neighborhood: Army Corps and FEMA do not always agree on flood protection benefits• Household: 40% of City’s buildings cannot be elevated; exploring alternative mitigation
strategies• “Pre-FIRM” construction: Need updated rate-setting methodology for old building stock
(focus of the Negatively-Rated Building Study being conducted by the National Academy)
Explore data collection options and launch affordability study• Working with FEMA and Google on low-cost approaches to gathering elevation data• Launching a 10-month study to assess affordability impacts and potential solutions
Inform the public: • Launching public education campaign regarding risks, mitigation and flood coverage
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3
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City Efforts and Next Steps: Flood InsuranceCity is taking steps to reduce risk and increase understanding of its exposure.
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CONFIDENTIAL
The City Council introduced over 20 bills to address resiliency in 2013
Flood-resistant construction for hospitals and nursing homes
Communicating risk and emergency plans Fuel storage in flood zone
Building Resiliency Task Force: 33 proposals
Proposed changes to codes Best practices/guidelines for emergency planning
and response
A Stronger, More Resilient New York recommends retroactive requirements for existing large buildings and for hospitals
Enhance protection of mechanical equipment Avoid long-term operational losses in a future
flood event
City Efforts and Next Steps: Codes and Standards
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Property Risk Management with Insurance
Property value may decrease due to unforeseen financial or physical loss (ie flooding).
Catastrophic damage is of particular concern to risk managers due to severity of loss – may restructure ownership.
Property insurance is the primary risk mitigate against catastrophic loss of value.
JV Partners
Mezzanine Lender
Junior Lenders
Senior Lenders
Property Value
Conceptual Real Estate Investment Structure
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Business Interruption
WindstormFloo
dContentsLaw & Ordina
nceTerrorism
Boiler
Basic Property Coverage
• Need for catastrophic coverage (flood, windstorm, earthquake) determined by location and property characteristics.
• National Flood Insurance Program (NFIP) requires flood coverage through mortgage process.
• Need for flood coverage usually determined by current Flood Insurance Rate Maps (FIRMS).
• Windstorm coverage usually included in property policy.
• Need for earthquake insurance usually determined by Seismic Zone or USGS’s PGA charts.
What type and how much property insurance is needed?
Property Risk Management with Insurance
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• Windstorm insurance limits usually equal insurable value (IV); no analysis needed. However, hurricane classification may impact coverage.
• Earthquake limits usually much less than IV; determined by seismic risk or probable maximum loss (PML) analysis.
• Flood limits usually equal NFIP limits.
• residential -$250k plus $100k for contents
• commercial - $500k plus $500k for contents.
• Flood coverage rarely determined by probable maximum loss (PML) analysis.
Property I
nsuran
ce Li
mit
Windsto
rm Su
blimit
Earth
quake S
ublimit
Flood Su
blimit
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Type of Coverage
Prop
erty
Rep
lace
men
t Val
ueProperty Risk Management with Insurance
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Flood & Windstorm Risk Management in East Coast
• Many properties in US high risk flood areas (Special Flood Hazard Areas – SFHAs) rely exclusively on NFIP flood insurance.
• In many cases, the NFIP limits of $250k for residential and $500k for commercial may be insufficient to cover probable maximum loss.
• In NYC, property characteristics such as location of mechanical equipment, electrical transformer, back-up power generators, etc. historically not considered in determining flood limits.
• Current Flood Insurance Rate Maps (FIRMS) or pending maps should be relied upon to determine flood risk.
• Property management’s ability to manage flood or windstorm restoration also critical in minimizing loss (ie - shortage of restoration contractors, generators, materials after Sandy).
• Best practice: engage a team and develop a detailed risk management plan before the crisis.
Property Risk Management with Insurance