If the Great New England Hurricane of 1938 were to occur again, it would cause more than $20 billion in insured losses in New York alone based on today’s property values and reconstruction costs, according to a recent paper by catastrophe risk modeler Karen Clark & Company (KCC).
The KCC warned that while New York does not face the same frequency or severity of events as disaster-prone areas like Florida, the state is not immune to significant losses.
Cat Risk Model states that New York has nearly $9 trillion in insured value, including residential and commercial properties, with $6 trillion of that concentrated in coastal counties alone.
Although the Northeast has not experienced a major hurricane in years, a single event can still cause significant damage given the state’s large population and density of exposure.
Eleven hurricanes have struck New York since 1850, the most famous of which was the Great New England Hurricane of 1938.
On September 21, 1938, the Great New England Hurricane made landfall in Bellport, New York as a Category 3 storm with estimated maximum sustained winds of 121 mph. It brought a storm surge of more than 15 feet to Long Island and moved inland, causing damage to Canada before transforming into a post-tropical cyclone.
KCC estimates that if this storm occurred today, it would result in approximately $20.5 billion in insured losses (the highest among the 11 events) and the second-highest total losses ($50 billion). Hurricane Donna is expected to cause the largest total losses at $61.1 billion, but insured losses are only $4.6 billion.
Meanwhile, Superstorm Sandy in 2012 caused nearly $10 billion in insured losses in New York, more than half of the storm’s total losses, even though it barely reached hurricane strength and made landfall in New Jersey. If this occurred today, it would result in insured losses of $13.2 billion (the second largest loss) and total losses of $31 billion.
KCC noted that hurricane risk in New York and along the entire U.S. coastline is changing due to global warming. Current scientific consensus shows that rising sea surface temperatures are increasing hurricane intensity. This directly means a general shift from hurricanes to stronger hurricanes that could threaten the Northeast.
The region’s 100-year hurricane will be a Category 3 hurricane with maximum winds of 121 mph, similar to the Great New England Hurricane. Lower-probability events, such as a 1-in-250-year hurricane, would be more intense and would be classified as category 3/4 marginal storms.
In addition to hurricanes, New York faces significant impacts from severe convective storms and winter storms, which collectively cause the state an average of nearly $1 billion in property damage annually.
The KCC emphasized that catastrophe losses pose regulatory challenges. Ensuring that property insurance is both available and affordable, while preserving the surplus that insurers need to withstand major events, requires a forward-looking approach and careful consideration of a variety of factors.