Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

Five years ago, Hurricane Cindy formed at about this same of year and from the same location. She went right through the area where the oil is currently gushing from the Gulf.

This weekend, a number of people reading this blog and throughout the coastal areas of the Gulf of Mexico will be watching for reports on Tropical Storm Alex. If it goes ever so slightly in a more northerly direction, it will disrupt and hinder the Oil Spill containment and clean-up efforts. It will be disaster for the coastal areas if it pushes oil into the estuaries. CNN noted these two scenarios in Tropical Storm Plus Oil Slick Equals More Fear and Uncertainty:
 

"The greatest nightmare with this storm approaching is that it takes this oil on the surface of the Gulf and blows it over the barrier islands into the bays and the estuaries," Sen. Bill Nelson, D-Florida, told CNN. "And that is where you really get the enormous destruction, because it's just very difficult to clean up those pristine bays."

Alex is heading is west-northwest direction and was not predicted to directly pass over the massive oil slick caused by the ruptured BP undersea well, though its path could change.

A tropical storm in the Gulf has the potential to disrupt BP efforts to collect gushing oil and drill relief wells. It would also complicate efforts to clean up miles of coastline. High winds and seas could distribute the oil -- still gushing from a blown deepwater well -- over a wider area while storm surges could wash more oil ashore, according to a fact sheet prepared by the National Oceanic and Atmospheric Administration.

While searching YouTube for a fitting and more optimistic conclusion to this post, I came across the following which shows how fortunate we are to be able to enjoy the remarkable talents and creativity of others in our age:
 
 

In 2009, the El Niño effect developed in the eastern Pacific, resulting in a very slow year for hurricanes. As of today, April 13, 2010, the eastern Pacific sea temperatures are approximately 3.5 degrees Fahrenheit warmer than normal...a moderate El Niño situation.

The temperatures in the eastern Pacific have been dropping and forecast numerical models agree that by the end of August, sea temperatures will cause a "neutral" zone, thereby having no effect on Atlantic hurricanes. Some models go as far as predicting an El Niño zone, causing Atlantic hurricanes to become stronger. Of course, it is much too early to know exactly what will occur. Remember, numerical models are only as good as the data input.

Normally when an El Niño situation occurs, the northern Gulf Coast and southern Florida should experience wetter than normal conditions. Up to today, the northern Gulf Coast is well behind in rainfall, but South Florida is above monthly averages. El Niño was also supposed to cause warmer than normal conditions along the northern Gulf Coast, yet we had a winter with much colder than normal temperatures. This goes to show that you can't rely on statistics alone.

As with previous years, I will explain in laymen’s terms what the National Hurricane Center is forecasting. I will also provide an update of the upper level weather situation and an outlook of how well the National Hurricane Center is performing.

Here are some points of interest for everyone:

1. Have a hurricane evacuation plan.
2. Review your insurance policy and determine of you have enough insurance coverage. After Hurricane Ike, I found that the majority of folks were under-insured on their properties. Don't expect the insurance companies to pay you more than what you have insured your property for. You may have to pay more for additional coverage, but it's better than not having enough to cover potential losses.
3. Inventory your belongings on paper and video, if possible. Again, my experience shows that the majority of homeowners do not take this step prior to a hurricane hitting their area.
4. Understand your responsibilities as a policyholder. Insurance companies have thousands of customers and can't spoon-feed every policyholder; policyholders should take responsibility for their own belongings and contractual obligations. You can't expect your insurance company to do its part if you don't do yours.
5. Pay attention to bulletins from the National Hurricane Center and your local authorities. In 2008, the initial thought was Hurricane Ike would strike the East Coast of Florida and it wound up in Galveston, Texas.

Everyone knows the danger and devastation that comes with a hurricane. Please protect yourselves, your families and your property.

-Rocco Calaci

Her news interview regarding natural disasters went as follows:

"Q. What does the 2009 hurricane season look?

A. It's going to be good. Tiny seven to eight hurricanes will be passing through Florida, but nothing serious hitting the Treasure Coast. But I do feel Texas, Louisiana, New Orleans and the west coast of Florida will be getting hit.

Q. Will there be a storm that causes a lot of water damage hit the Treasure Coast, like Tropical Storm Fay?

A. I don't see that happening. But one of the things I saw is actually fires. We need to conserve our water supply. I see five fires. One has to do with negligence, but I have a feeling it has to do with the drought."

Many may dismiss Ms. Hansen’s predictions. Could she be any worse than the more traditional and scientific hurricane soothsayers? Bill Gray of Colorado State University achieved some notoriety for hurricane prediction. His hurricane guesses were based on computer models, historical storms, and data on global sea-surface temperatures, atmospheric conditions and other factors. In recent years, his methods have been adopted and adapted by NOAA's National Hurricane Center, which makes its own long-term forecasts. All of those models had some revisions after the 2006 and 2007 hurricane seasons proved them wildly inaccurate.
The property insurance business has some similarities to gambling. Insurers are like casinos, they want the odds in their favor so that over the long term and in the law of large numbers, they make money on the bets they accept. They want a sure thing, which seems a little strange since insurance companies are in the risk business.

Unlike craps, blackjack, and various slot machine games of chance where the casino odds are known, property insurers have a far different landscape. The chances of winning are virtually the same for all casinos, and definitely in the casino's favor. Most of the time, property insurers have competitors offering consumers different products with different rates. The models insurers use to determine probabilities of loss are not the same and not mathematically guaranteed. While predicted insurance profit margins (the odds) may be much higher than the "house edge" in most gambling games, the risk of ruin from a large scale catastrophe, such as a hurricane, are usually much greater than the risk taken by a casino. It is no surprise that the Seminole Indian Tribe selected gambling rather than insurance as a wiser use of its investment dollars.

In the short term, the chances of Susan Hansen's predictions being right are probably no better than the expensive models which try to guess the probabilities of the number and track of hurricanes in the next five years. As I pointed out in a recent blog, even insurance company hurricane predictors admit their models have not proven reliable. Maybe the underwriters of property insurers should call Susan Hansen, and save a lot of money otherwise spent on those short term forecasts.