& C O M P A N YThe great storm continued on its northerly track, picking up speed and intensity....

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The Great New England Hurricane of 1938

What a 100 Year Northeast Hurricane Will Do Today

K A R E N C L A R K & C O M P A N Y

September 16, 2013

Copyright©2013 Karen Clark & Company, Inc. The Great New England Hurricane of 1938 2

The Great New England Hurricane of 1938 and What a 100 Year Northeast Hurricane Will Do Today

Seventy-five years ago, on September 21, 1938 a deadly and devastating hurricane came ashore near

Bellport, Long Island. Believed to be a Category 3 hurricane at landfall with sustained winds of 120

mph, the storm caused unprecedented destruction and casualties for the Northeastern US. Significant

wind damages were experienced throughout the region, and many coastal towns were completely

wiped out by storm surge heights exceeding 10 feet.

Because there was no advance warning, nearly 700 people died in this hurricane with an equal number

injured. Thousands of homes and other buildings were destroyed, and over 3,000 ships were sunk or

wrecked. The hurricane felled millions of trees throughout the region and destroyed entire forests. It

downed power lines and caused outages over most of New England.

When this type of storm occurs again, the insured damages and economic losses could be larger than

any storm seen to date because of the enormous concentrations of property values along the coasts of

New York, Connecticut, Rhode Island, and Massachusetts. KCC estimates that over $15 trillion of

property value would be in the storm’s footprint today. While better forecasting systems will likely

prevent the large loss of life, the right track could result in insured losses exceeding $100 billion and

economic losses more than double that number.

As we approach the seventy-fifth anniversary of the Great New England Hurricane of 1938 this report

examines what this storm would do today and more importantly, what a 100 year Characteristic Event

(CE) looks like for the Northeast region. What type of event should insurers be prepared for and what

could be worse than the 1938 storm? This report shows the primary determinant of likely losses in the

Northeast is the storm track, and insurers should not be lulled into a false sense of security by looking

only at what’s happened in the historical record.


A Historical Perspective – The Storm in 1938

The Great New England Hurricane of 1938 started out as a typical Cape Verde hurricane with a west-

northwesterly track that seemed destined for a Florida landfall. On September 19th the Jacksonville

office of the US Weather Bureau issued a warning that the storm might impact the state. But a deep

trough over the Appalachian region caused the hurricane to turn northward on September 20th and to

pick up speed on a more northerly track.

After the track change, the responsibility for the forecast shifted to the weather bureau’s headquarters

in Washington DC. Senior meteorologists in that office did not believe the storm would make landfall in

the Northeast but rather predicted it would veer out to sea as was typical for hurricanes. They also

forecast a weaker storm due to the colder ocean waters north of Cape Hatteras.

Only one young meteorologist named Charles Pierce was concerned about the track of the hurricane.

Observing the high pressure system over the continental US and a Bermuda High further north than

usual, Pierce predicted the storm would remain sandwiched between these two systems and take a path

due north into New England rather than turning to the northeast and out to sea.

Unfortunately, Pierce was overruled by the senior staff who had never seen a hurricane make landfall in

the Northeast. Consequently, no hurricane warnings were issued for New England, and the storm was

downgraded to a tropical storm. Only gale force warnings were issued for the region.

The great storm continued on its northerly track, picking up speed and intensity. When it made landfall

across central Long Island on the afternoon of the 21st, it was traveling at over 50 mph with a defined

eye of over 40 miles. Maximum winds at landfall were an estimated 120 mph. The hurricane sped

through the region moving due north until turning to the northwest and tracking into Canada.

Track of Great New England Hurricane

September 21, 1938 Weather Map

Source: intellicast.com

Source: Track Data from “Reanalysis of Ten U.S.

Landfalling Hurricanes”


With no warning of the imminent danger, coastal residents along the Long Island, Connecticut and

Rhode Island shores were taken by surprise when the skies darkened, the winds picked up, and the

rising waters started flooding their homes. Before they could even imagine what was happening, waves

and walls of water over 10 feet high came crashing across the shore destroying homes and well built

structures as if they were matchsticks.

Personal accounts of survivors can only hint at the horror of that afternoon. The images below reveal

the extent of the destruction.

Location: Westhampton Beach, NY

Source: Time

Location: Island Park, RI

Source: NOAA Photo Library

Location: Cranston, RI

Source: Rhode Island Historical Society

Location: Providence, RI

Source: Boston Globe

Location: New London, CT

Source: Rhode Island Historical Society

Location: Williston Park, Long Island

Source: New York Daily News

Location: Amherst, MA

Source: Library of Congress Collections

Location: Worcester, MA

Source: NOAA Photo Library

Location: Canton, MA

Source: Canton Historical Society


The damage toll was extensive:

Over one third of New England’s forests affected with over two billion board feet of trees felled

by the storm

Significant structural wind damage experienced as far inland as Worcester, MA

700 fatalities; 63,000 homeless

Tens of thousands of buildings destroyed

What a Similar Hurricane Would Do Today

While there is less actual data, historical records indicate several major hurricanes impacted the

Northeast region before 1900. Dr. Nicolas Coch from Queens College on Long Island has found evidence

of notable events in 1635, 1821 and 1893. His work is supported by the scientific papers of Donnelly

and Boose referenced at the end of this paper.

1938 Track and Wind Footprint

Source: RiskInsight®

While there are few reliable wind

speed measurements for the Great

New England Hurricane of 1938,

the wind footprint can be

reconstructed using the

meteorological data and analyses

conducted by various research

organizations, including the

National Hurricane Center (NHC)

and the Risk Prediction Initiative

(RPI). Using this information, KCC

experts reconstructed the wind

footprint. KCC estimates this storm

would cause insured losses in

excess of $35 billion today and

economic losses of more than twice

that amount.


Given the historical record, it’s reasonable to assume the Great New England Hurricane of 1938 is a 100

year type event for the Northeast. While a storm of this intensity, i.e. maximum sustained winds of 120

mph, has an estimated one percent probability of occurring, it could make landfall anywhere along the

Long Island, Rhode Island, or Massachusetts coastline.

The various landfall points will result in dramatically different industry losses and damages because

hurricanes are “right handed” in the northern hemisphere, with the strongest winds occurring from a

few miles to 50 miles to the right of the storm center. In the Northeast, hurricanes tend to be large with

an eye radius in excess of 20 miles. Hurricanes that make landfall further to the west will cause more

damage in the Northeast because more of the right side of the storm will be over highly populated

areas.

To account for the risk along the entire coast, KCC has developed the Characteristic Event (CE)

methodology of “floating” the 100 year CE and estimating the resulting losses. There are 22 landfall

points spaced at 10-mile increments in the Northeast region. The CEs have the return period wind

speeds and other characteristics, such as track, forward speed, and filling rate that are typical for the

region and selected return period.

The figures below show the wind footprints for three of the 100 year CEs.

Industry Loss

Landfall: Queens, NY

Landfall: Hampton Bays, NY

Landfall: Westport, MA

Distribution of Loss Distribution of Loss Distribution of Loss

NY

CT

RI

MA

NH

ME

Other

NY

CT

RI

MA

NH

ME

Other

NY

CT

RI

MA

NH

ME

Other


To estimate the industry losses for the floated CEs, KCC utilized a detailed proprietary database of

property values (KPD). The KPD includes estimates of building, contents, and time element values by

occupancy class and five-digit ZIP code. The chart below shows the industry losses from the 100 year CE

making landfall from western Long Island to Cape Cod.

With respect to the losses, the worst tracks are those in which the hurricane makes landfall across

western Long Island. The westernmost landfall points result in insured losses exceeding $100 billion.

Historically, no major hurricane has taken this track, but given the length of the historical record this

doesn’t mean it’s not possible or probable. Tools that rely on the historical record alone can

significantly underestimate the chances of this type of an event and potential Northeast hurricane

losses. Insurers should not make the same mistake as the senior forecasters who did not believe the

1938 storm was going to make landfall on Long Island because they hadn’t seen it happen before.

Two recent tropical cyclones, Irene

(2011) and Floyd (1999), made

landfall close to New York City

and had they been major hurricanes

would have caused losses much

greater than any historical Northeast

event. Irene’s track in particular would

have caused insured losses in excess

of $100 billion had it been the intensity

of the 1938 event.

150

100

50

100 Year CE Losses for the Industry by Landfall Point

Esti

mat

ed L

oss

($

Bill

ion

s)


Managing Hurricane Risk Using the CE Methodology

For the past 20 years, insurance companies have been using exceedence of loss probabilities, such as

one percent and 0.4 percent, to quantify and manage hurricane risk. One in 100 and one in 250 year

“probable maximum losses” (PMLs) are currently used by rating agencies and regulatory bodies. While

these numbers are interesting mathematically and are readily derived from the catastrophe model-

generated exceedence probability (EP) curves, they do not provide intuitive or robust risk metrics for

managing hurricane risk.

The PML approach can give a false sense of security by masking exposure concentrations that could lead

to solvency-impairing events. Because the model-generated EP curves are developed through

simulations of random tracks and other hurricane characteristics, exposure concentrations can be

missed entirely—that is, there may be no or insufficient events in geographical areas where a company

has significant exposure concentrations. (Alternatively, other areas can be over sampled.) That is one

reason why there have been so many surprise events and “black swans” over the past several years.

In recognition of the fact that PMLs don’t provide answers or complete information, companies can be

tempted to go back to the more straightforward approach of simply adding up limits to monitor

accumulations. While providing important information, this can lead to overly conservative strategies

and is not totally satisfying because a billion dollars of limit is a lot different in Florida versus the

Northeast, for example. Likewise, simple scenario-based approaches, such as Lloyd’s Realistic Disaster

Scenarios (RDS), do not capture exposure concentrations or probabilities effectively.

In light of these problems and risk management challenges, KCC introduced the Characteristic Event (CE)

loss estimation methodology. In the CE approach, the hazard probabilities are quantified and then the

losses are calculated for different return period events by landfall point. It’s the flip side of the EP curve

approach. The probabilities are based on the hazard versus the loss.

There are several advantages of the CE approach. While providing probability information, it also clearly

identifies exposure concentrations and “hot spots” and provides transparent and intuitive information

for decision makers, including boards and CEOs. The CEs stay the same from year to year, providing

consistent metrics for measuring and monitoring risk over time. CEs are operational risk metrics that

can be drilled down to individual policies for marginal impact analyses, pricing, and portfolio

management.

The 100 year CE loss chart is shown below for a hypothetical company. The landfall points are shown

along the x-axis, and the red bars show the losses from the 100 year events at each point. The black

horizontal line shows the company’s model-generated PML in a position that’s typical for most insurers.

The CE chart illustrates much richer and more complete information than the simplistic PML number. It

shows clearly where the company could have a loss well above the 100 year PML from the 100 year CE.


Because the CEs are stable from year to year, companies can use them to measure and monitor loss

potential over time and to develop more optimal portfolios of business while reducing the “spikes.”

Model-generated PMLs provide valuable information on potential losses, but they are less effective in

helping companies understand and manage the risk. Companies want more consistent risk metrics, full

transparency on the loss calculations and key drivers, and flexibility to customize assumptions to better

reflect their specific books of business. The CE approach delivers the solution to these risk management

challenges.

The CE approach is not limited to hurricanes, but can be applied to any peril in any region of the world.

KCC is collaborating with several scientific organizations to create CEs for European windstorms,

earthquakes, floods, and other hazards.

300

200

100

Esti

mat

ed L

oss

($

Mill

ion

s)

100 Year CE Losses by Landfall Point for Hypothetical Company

Model-generated PML


Validating the Wind Footprint for the 1938 Hurricane

The wind footprints shown in this document were developed using RiskInsight®, the advanced open

platform for catastrophe risk management. KCC experts devote considerable resources to developing

and validating the components of RiskInsight®. Because there were very few recordings of the wind

speeds for the 1938 Great New England Hurricane, scientists have studied this storm and inferred the

likely wind speeds from other data, including the damage. Dr. Emory Boose extensively studied the tree

damage for the 1938 event and converted his findings to the Fujita scale used for tornados. There is high

correlation between the observed damage pattern and the RiskInsight® footprint.

Fully transparent and highly credible wind footprints for all significant US hurricanes since 1900 are

available in RiskInsight®. Over 2,000 CE footprints are also available for all major return periods and

coastal regions. These footprints can be used to estimate losses for individual policies, portfolios of

policies, and the industry as a whole.

For more information contact: [email protected]

RiskInsight® is a registered trademark of Karen Clark & Company

Source: RiskInsight®

1938 Wind Footprint from RiskInsight®

1938 Wind Footprint from Dr. Boose

Source: Boose, E.R.


References

Boose, Emery R. et al., 2001. Landscape and Regional Impacts of Hurricanes in New England. Ecological

Monographs 71:27–48.

Coch, Nicholas. “The Unique Vulnerability of the Northeast U.S. to Hurricane Damage.” Geological

Society of America. Abstract. National G.S.A. Philadelphia, 2006

Coch, N. K., 1994, “Hurricane hazards in the Northeast U.S.” Journal of Coastal Research. Spec Issue No.

12 - Coastal Hazards, Chapter 9 (pp. 115-147).

D’Aleo, Joe (2008). “The September Surprise – The Great New England Hurricane of ‘38”. Retrieved from

http://www.intellicast.com/Community/Content.aspx?a=135

Donnelly, Jeffrey et al, “700 Year Sedimentary Record of Intense Hurricane Landfalls in Southern New

England” Geological Society of America. June 2001.

Goudsouzian, Aram. The Hurricane of 1938.Commonwealth Editions, 2004.

Landsea, C., M. Dickinson, and D. Strahan, 2008: Reanalysis of Ten U.S. Landfalling Hurricanes. Final

report submitted to the Risk Prediction Initiative, 120pp.

Monthly Weather Review - September 1938. National Hurricane Center. Volume 66 Issue 9.

NOAA Hurricane Research Division of AOML (HURDAT). Retrieved from

http://www.aoml.noaa.gov/hrd/hurdat/

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& C O M P A N YThe great storm continued on its northerly track, picking up speed and intensity....

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