Alas, my homeowner’s insurance policy is being dropped, because a weather forecasting group predicts a busier than normal hurricane season, May 15 through November 30, with a major storm hitting the Northeast. Read on my fellow New York and east coast residents, this one affects us.

“There are indications that the Northeast will experience a hurricane larger and more powerful than anything that region has seen in a long time,” the senior meteorologist and director of forecast operations of AccuWeather.com told the Associated Press. AccuWeather meteorologists say that current weather cycles and water temperatures make it a question of when, not if. They also say Northeast damage as a result of a hurricane could surpass that caused by Hurricane Katrina.

In the meantime, the Allstate Insurance Company has decided to cancel, or not renew, insurance policies for 28,000—roughly 3.11 percent—of their 900,000 New York customers. According to a New York Daily News story published on Apr. 23, one other insurer, MET, has declined taking new business in the eight so-called hurricane counties, which encompass the five boroughs, plus Nassau, Westchester and Suffolk.

I originally saw information about this- of all places- on Geraldo this week. And sure enough, today I received an interesting note in my mailbox.

Hurricane Katrina may have made landfall on the Gulf Coast last year, but its effect is being felt hundreds of miles away as insurers scramble to reduce their exposure to future catastrophes. Allstate is canceling policies in 30,000 homes based in coastal counties of New York, citing the need to protect itself from future storms. Other major players are following suit: Nationwide Mutual Insurance Co. is no longer writing new policies for the eastern half of Long Island, N.Y., while MetLife Inc. is requiring extra inspections and expensive storm shutters for new customers living within five miles of salt water.

It’s a strategy of retreat that has unfolded before: After Hurricane Andrew in 1992, insurers drastically scaled back their presence in Florida, forcing residents into the expensive, state-run insurance pool. The difference is that now insurers are not just shedding policies in traditional hurricane targets such as Florida, but all along the eastern seaboard.

I’ve read quotes likes this is “out of control” and “completely irresponsible”, and yet Geraldo reminded me that the insurance business is still in fact a business. I suppose it stings for me because of the adult reality: it’s not like I have a choice- having a mortgage means having to have homeowners insurance. And one of the interesting notes of last year’s storm is that insurance companies reported a record $43 billion profit in 2005 — an 11.7% increase over the previous year and the highest net income since 1991, according to the Insurance Information Institute, a trade group.

Being an Adult Means Knowing You’re a Dollar Sign

Insurers said profits told only half the story: The property-and-casualty insurance industry was able to weather the huge losses resulting from Katrina because they were themselves insured. Half the $58 billion in insured losses resulting from last year’s hurricanes were absorbed by reinsurers, companies that insure insurance companies, according to the institute.

I’ll tell you what the other half of the story is, though. Consumers getting bit in the ass by this nasty business. We purchase insurance to protect ourselves from risk, and insurance companies take the risk of doing business in this climate. Of course it’s the big company that wins- they simply pack up and move out of town if that risk threatens profit, leaving people like me to pay the cost. Scratch that- not just newer homeowners like myself, but people who have had insurance with Allstate for decades. You’ll see it in upcoming news, I’m sure.

And so I’m off to the phones this week to find some new insurance… and of course, freaking out just because I live in NY. I know what my New Jersey friends are saying already– “well, you did move to New York”. Fair enough. Say, did they open Atlantic City again yet? I heard New Jersey closed last week! Seriously though, I’m not in a horrible area for this type of stuff. Staten Island is cuddled in the ‘neck’ of NJ, somehwhat inland. Nevertheless, IF New York gets hit hard, it seems it ALL gets hit hard. Check out THE BIG ONE at http://www.nypress.com. Considering what hard rain does to NY and NJ alike, I shudder to think what would happen if something like this were to happen to us. Perhaps it’s all just a bunch of needless fear, but it’s still something to think about.

A History of Tumultuous Weather

New York City has a long history of turbulent weather and consequent damage from major tropical storms and hurricanes during the summer and early fall. A few of the most damaging storms include:

1. The Hurricane of 1821, which produced a sea level rise of up to 13 feet (about 4 meters) in one hour in the area that is now Battery Park City.
2. The “West Indian monster” of 1893, which triggered a 30-foot (about 9-meter) storm surge that razed nearly all man-made structures on its course through southern Brooklyn and Queens.
3. The “1938 Long Island Express” and its accompanying tidal surge and surf, which registered on seismographs in Alaska when it roared ashore at Bayport, Long Island, causing 690 deaths across the Northeast.
4. Hurricane Agnes in June of 1972, which caused record inland flooding across the Northeast and maintained its standing as the United States’ most costly natural disaster until Hurricane Andrew in 1992 (and remained America’s fifth-costliest tropical cyclone through the 2004 hurricane season after adjusting for inflation).
5. Tropical Storm Floyd in September 1999, during which New York State and upstate New Jersey received 10 to 15 inches (25-38 centimeters) of rain during a 24-hour period, causing significant flash flooding in New York City. The New York metropolitan transportation system nearly shut down and emergency storm shelters opened throughout the city.

Devastating northeasters can also cause significant damage to New York City; in addition, overall damage can be even more widespread than for hurricanes, sometimes extending along the entire East Coast. Northeasters are cyclonic storms that begin as low-pressure systems off the mid-Atlantic coast and ravage the Northeast as they move up the coast during the fall, winter, and early spring. Despite their winds being weaker than those of hurricanes, they inflict heavy damages because they often maintain their strength over several tidal cycles at a particular location. Among the most damaging northeasters have been:

1. The Blizzard of 1888, in which 40 inches (about 102 centimeters) of snow fell in New York City and approximately 400 people died. The northeaster affected the East Coast from Chesapeake Bay to Maine.NYC Office of Emergency Management — Madison Avenue and 50th Street in New York City during the Blizzard of 1888.
2. The northeaster of December 1992, which prompted the closing of New York City’s airports, trains, subways, and highways; caused significant beach and dune erosion; and collapsed a row of houses on Fire Island’s western side.
3. The “Storm of the Century” in March 1993, which damaged 12,000 homes on Fire Island, killed 270 people, and caused damage in excess of $3 billion.

We’ll Be OK, But it Will Cost Us

Ironically, most of the general links on the net hosted by www.nyc.gov are broken- I guess they moved, or the people who wrote up those weather emergency pages move somewhere else in the country. As I said, in reality the odds of Staten Island having much trouble are the same as anyone in Jeresey. We’re out of the way, and despite the fact I can see the ocean from my street, we’re pretty safe unless a monster comes stomping. I swear I’m not just trying to convince myself (as I slowly move all my favorite stuff in the basement to the the 2nd floor bedrooms).
I truly do digress; I was complaining about Allstate. After talking about all those crazy weather scenarios for New York, you may now be saying “Mike, what do you expect? Dang”… but I hold steadfast to this idea- this is the business they are in. What good is an insurance company that only provides insurance to those who don’t need it? I mentioned Geraldo. I’ll leave you all with Google to find more info, and a video of the story I saw a couple days ago on Geraldo about someone else losing their Allstate coverage: Hurricane Insurance: Hurricane season threatens millions of homeowners each year, but some residents in the northeast may no longer have insurance coverage. (First July 5th video in the archive.) Cheers.

Filed under: Speak Easy