What Can 2023 Teach Us About Future Natural Catastrophes?

A Conversation With Jon Schneyer

It already seems like 2023 is long ago, but the consequences of natural disasters and the lessons we’ve learned from them are far from the past.

In This Episode:

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Are Insurers Prepared for an El Niño-Fueled Hurricane Season?

Jon Schneyer:

I think one of the lessons we can take away from the events we saw this year, it’s actually something we learned a little bit during Hurricane Ian back in 2022, and that’s the effectiveness of building codes when it comes to mitigation.

Maiclaire Bolton Smith:

Welcome back to Core Conversations: A CoreLogic Podcast, where we tour the property market to investigate how economics, climate change, governmental policies and technology affect everyday life. I am your host Maiclaire Bolton Smith, and I’m just as curious as you are about everything that happens in our industry.

Whether you like it or not, weather is something that affects us all and not just the kind of weather that comes up in daily small talk like an unexpected rainstorm or the occasional uncomfortable warm day. We are talking about major natural disasters like hurricanes, severe convective storms, and wildfires. So how does this kind of weather affect insurers, the property market, and really anyone who is subjected to the whims of Mother Nature?

So as we start off into a new year and spring is just around the corner, we’ve invited CoreLogic’s Director of Catastrophe Response Jon Schneyer to talk about what happened with natural catastrophes in 2023 and what may be brewing for this spring season. So Jon, welcome back to Core Conversations.

JS:

Thank you so much for having me back. It’s a pleasure to be here.

MBS:

All right, well we always love having you here Jon. So let’s just kick it off, and we’re now a couple of months into the new year and spring is upon us, which also means that severe storm season is upon us as well. So, before we talk too much about what the future holds, let’s take a look back at what happened in 2023 because I know that the big story for 2023 was hail. So, let’s talk about what happened, why did it happen, and just break it down a little bit.

JS:

Yeah, no, it’s a good question. So like you said, 2023 was really dominated by, like you said, severe thunderstorms or severe convective storms.

MBS:

Yeah.

JS:

Hail was obviously the big one, but we can’t rule out straight-line winds, tornadoes also did a ton of damage across the country. This wasn’t your typical tornado alley or hail alley in the plains or in parts of the Southeast. It was almost a countrywide phenomenon.

MBS:

Wow.

JS:

And to the point where hail, wind, tornado damage, if you summed up all those losses, those insured losses over the year, it’s rivaling that of a major hurricane, a single major hurricane, like a Hurricane Ian kind of event and the $50 billion, $60 billion. And that’s something that we haven’t actually seen to-date. That’s a brand new record.

MBS:

Wow.

JS:

And there’s a couple of factors. First and foremost, it was an incredibly active hail season, more so than in the historical record. Through the end of October, there were 144 days with large hail. By large hail, I mean hail greater than 2 inches. And that’s large enough to do significant damage to your roof, either enough where you’re going to have to replace it entirely or do some pretty major repairs.

MBS:

Okay. Okay.

JS:

So 144 days. And if you look back at the 20-year average, going back to like 2002, 118 days. So much more active this year.

MBS:

Significantly more active.

JS:

Way more active. So active is obviously bad, right? There’s more hail, there’s better chance for damage, but generally speaking, hail is going to fall in areas where there’s no property. But we had that intersection of a lot of hail and a lot of property getting hit and major cities like the Dallas-Fort Worth, Austin area in Texas were hit particularly bad causing quite a bit of damage.

Erika Stanley:

Before we get too far into this conversation, I wanted to remind our listeners that we want to help you keep pace with the property market. To make it easy, we curate the latest insight and analysis for you on all of our social media where you can find us using the handle @CoreLogic on Facebook and LinkedIn or @CoreLogicInc on X, formerly known as Twitter, and Instagram. But now let’s get back to Maiclaire and Jon.

MBS:

Okay, so there’s a couple of things there. So first of all, you said anything greater, 2 inches doesn’t look that big, but when you’re talking about pellets of ice flying at you, it can cause quite a lot of damage. So I know that it really was a big year for that. So one thing I did want to clarify a little bit because you sort of got into this is that the increased frequency versus increased severity, so there were more bigger hailstorms, but there also were just more hailstorms in general, bigger hail falling in those hailstorms and hail falling in regions that are actually populated versus just in the middle of nowhere.

JS:

Exactly. And actually to your point there, hitting more populated centers. A lot of research we’ve done here at CoreLogic is sort of the change in where people are moving to and building homes, and that’s another one of these issues where people are moving to areas like Texas and the Southeast, warmer climates, more space, a cheaper cost of living relative to New York City or LA or any of the big cities. People had to live there because they had to go into the office. But in this work-from-home world we live in, people can move elsewhere and do what makes it easier.

So these areas that were hit pretty hard with hail this year are areas where people are building homes, bigger homes, more expensive homes, and on top of that, the cost to repair any of this damage is going up. Those inflationary pressures on materials and labor are really driving up individual claims. What might’ve been a $5,000, $6,000 roof repair 10 years ago could be twice that now. So that is really going to inflate those insured losses in the end.

MBS:

Yeah. And that really just follows up on how we started this season. We talked with our chief economist about pandemic migration and how people were moving out of these bigger coastal cities into these more into the Midwest and plains regions and building these very large homes. So it’s all related, and we touched too. Yeah.

JS:

It’s that intersection of hazard and property that’s kind of what we always look at. That’s exactly what it is. Now that there’s more property, more exposure, these areas that have always been hit by hail, but there hasn’t been much there before, well, now there’s a lot there.

MBS:

Yeah. What if we look outside of the U.S. and even outside of weather from a natural catastrophe losses events from the past, from the year 2023, what kind of dominated the headlines? We didn’t see any major hurricanes this year, not like we had in the past. What really dominated the headlines for natural disaster losses?

ES:

It’s important that you know that we recorded this episode at the end of December 2023. Since then, natural catastrophes have continued to happen across the globe, including a magnitude 7.5 earthquake that shocked western Japan on New Year’s Day. Read more about insured loss damage estimates as well as the rarity of such an event at the link in our show notes.

JS:

Yeah. So going back to February, March and the international scene was dominated by Turkey earthquakes. The devastating earthquakes that affected Southern Turkey and Northern Syria caused insurmountable damage in those areas. Buildings, cities were completely leveled. In Europe, mainland Europe, we had a number of winter storms starting in November. We had a Babet and Ciarán, two pretty nasty winter storms, but that was a very wet storm, a lot of flooding in northern U.K. And Ciarán was an incredibly strong wind event, actually set some meteorological records on its way through sort of southern U.K. and then that sort of northwestern France and then into, up the channel. Fortunately, that storm missed, the strongest winds missed the major population centers. So what could have been a record windstorm loss in the U.K. and Europe ended up being a close miss, which that’s a great thing.

MBS:

Yeah, for sure.

JS:

So on the international scene, those are probably the biggest stories. It’s not that we didn’t have hurricanes this year, we just were really fortunate. It’s a game of probability. We actually had a pretty active hurricane season, actually one of the… In terms of named storms, it was the fourth-highest number of named storms in a year.

MBS:

Wow.

JS:

We had seven hurricanes, three major hurricanes. We were lucky that one of them, only one made landfall in the U.S. We’re talking about the Atlantic. And that was Idalia, made landfall as a Cat 3. So in that sense, we actually got pretty lucky with the hurricane season. Hopefully that holds up for 2024.

MBS:

Yeah, I guess time will tell.

ES:

Before Jon and Maiclaire continue the conversation about natural catastrophes, it’s that time again. Grab a cup of coffee or your favorite beverage, we’re going to do the numbers in the housing market. Here’s what you need to know.

As dynamics shift within the housing market, the rate of serious mortgage delinquency in the U.S. fell to the lowest level since 1999. FHA loans exhibited a higher serious delinquency rate than their conventional counterparts. However, not everyone is benefiting identically from current market dynamics, choosing lease renewals or seeking more affordable alternatives amidst the evolving market landscape where rent continues to compete with inflated living costs. Rental prices themselves are holding relatively steady though.

In November 2023, U.S. single-family rent growth maintained a consistent 2.7% year-over-year increase. Rental prices themselves are holding relatively steady though. Rent for attached properties outpaced detached single family rental costs growing by 3.3% and 2.3% respectively. San Diego led in rent gains while Austin and Miami experienced annual declines. Lower-price rentals continued appreciating, reflecting a market where cost sensitivity is becoming increasingly prevalent. And that’s The Sip. See you next time.

MBS:

Okay, so I want to talk a little bit about what you just said about hurricane season last year because you were here maybe near the end of hurricane season last year and we specifically talked about El Niño and how this was this new El Niño year and how things were happening and how it was going to change the hurricane season. So can we talk about what we saw? I remember at the beginning of hurricane season, we were seeing that it was more than a hundred-degree temperatures off the coast of Florida and that’s just insane. So we had these record high sea surface temperatures, really good conditions for hurricanes to form, and we did get hurricanes, just nothing that was major landfalling. How did El Nino play a role in that? And the second part of that I guess would be is El Nino still here and do we think it’s going to do something for 2024?

JS:

Yeah, so 2023 was a royal rumble between…

MBS:

A royal rumble.

JS:

A royal rumble between sea surface temperatures and El Niño in the North Atlantic Ocean. So we moved from a couple years of La Niña conditions to El Niño, and one of the global teleconnections associated with El Niño is it can sort of fight hurricane development in the North Atlantic.

MBS:

Okay.

JS:

So you sort of have these wind conditions trying to make it more difficult for hurricanes to form and intensify. On the other hand, as you said, we had record warm sea surface temperatures in the Atlantic and in the Gulf of Mexico and in the Caribbean, and hurricanes need warm sea surface temperatures and ocean heat content to form, to strengthen, rapidly intensify. So like I said, we had this battle of these two phenomena.

And throughout the entire season the conversation was which one’s going to win? And in the end it does kind of look like sea surface temperatures won out.

MBS:

Interesting.

JS:

It was pretty hot and it was a pretty active season. It just came down to probability that one didn’t happen to hit the coastline, which is not to say that the effects of El Niño weren’t observed. There were a number of hurricanes that were trying to strengthen, but were cut off because of we get a lot more extra wind shear from El Niño and that kind of keeps hurricane from forming.

So like I said, in that royal rumble, I would say I would give round one to sea surface temperatures, and as we move forward into 2024, I’m imagining that the same conversation is going to take place where there’s no reason to suspect that sea surface temperatures won’t be as warm or warmer. As the earth warms up, the ocean temperatures are warming up. And from what I’ve seen, they don’t expect El Niño to go away anytime soon. So…

MBS:

Interesting.

JS:

… 2024 could be a repeat of 2023 in the sense we’ll have these two phenomenon battling each other. Hopefully, again, we don’t have any major hurricane landfalls in a huge population center, or we’ll be dealing with another Ian-like event in 2024.

MBS:

Sure. Yeah. Well, I mean, only time will tell. It’s going to be really interesting to see because with this royal rumble we’ll just have to wait and see what 2024 ends up looking like.

I guess the other thing too when we look back at 2023, wildfire wasn’t —specifically in California. It didn’t seem to be major headlining like it has been in past years. Obviously, there was some very devastating fires in Canada as well as in Hawaii. So what can we say about the 2023 wildfire season?

JS:

Yeah, the 2023 wildfire season was actually, again, in continental United States, in California, the Pacific Northwest was actually pretty mild. We’ll set Lahaina and Maui aside, we’ll talk about that later. But in California it ended up being a pretty mild year, a pretty late start, fairly early end. The wildfire seasons never really over, I guess. It’s kind of a year-long peril. But we can really chalk that up to all that precipitation we had going back to the winter. If you remember the atmospheric rivers that were dumping on California.

MBS:

Yeah.

JS:

You know. You were there in California. You were there for them.

MBS:

Yeah, I remember. It rained like crazy.

JS:

It rained, it rained like crazy, and it rained for months on end. So that’s really good for wildfire suppression, right? There’s a lot more soil moisture and plant moisture.

It continued to rain throughout the year, so that helped fire suppression efforts when there were fires. So in the end, 2023 was not particularly bad if you look at the number of fires or acres burned. It was actually about the same as 2022. Way, way down than what had been occurring the previous five years where we’ve been in drought conditions across the West year in and year out. That’s why those wildfire seasons were so bad.

So the trade-off there is unfortunately, if it’s going to rain a lot, plants like rain and they’re going to grow. So what is, I’m not going to say expected, but what people are concerned about is that with all that rainfall, we’ll have a lot more plant growth and once it does start to dry out, assuming as I said, we’ll cycle between really rainy years and really dry years, once we get back into those drier years or drier time of the years, well, then there’s a lot more fuel on the ground for fires to burn. So that is kind of the concern. While all the atmospheric rivers and all the rainfall we had this year were great for suppressing wildfires, it could be building up the fuel load for future years. So California and the Southwest in general could be in trouble a couple years down the road when it starts to dry out.

MBS:

Yeah. And I mean we’ve all seen the cycle here in California with the excessive droughts, which have led to extreme wildfires. And now that is exactly what we’re hearing is with all this rain, we’re getting all this new fuel growth.

So we touched on it just briefly, but if we kind of jump over to Hawaii and what happened in Lahaina, can you talk a little bit about that devastating fire that happened last year?

JS:

Yes. The wildfires in Lahaina were truly tragic, one of the most devastating deadly wildfires in U.S. history, maybe world history. There was a collection of number of factors that made that wildfire, that incident so bad. So while it was somewhat dry, it wasn’t persistent drought conditions, but a lot of these grasslands that surround Lahaina kind of to the northeast, as you go towards the mountains, these grassy areas, they can dry out a lot quicker than trees and large plants. So they dried out in just moderate or even light-dry conditions.

MBS:

Yeah.

JS:

And we had a lot of wind. So, Hurricane Dora was in the Pacific Ocean several hundred miles southwest of Hawaii, but that low-pressure center in the center of a hurricane was one half of a gradient. To the northeast of the islands, we had a high-pressure center. When you have a high- and low-pressure center, you get winds moving from high to low. So that was blowing from the northeast down the slopes of the mountains in Maui towards Lahaina, and all you needed was a spark. So once there was a spark, those grasses could catch on fire. The winds were pushing flames and embers towards Lahaina. And then once the flames and embers got to the city, the wildfire could start spreading incredibly rapidly through the town.

A lot of the common building construction practices that we could observe, a lot of wood-frame construction or siding, a lot of porches with lattices and open space beneath them, a lot of built-in ventilation systems because it’s typically very warm and humid there, these are really great for trapping embers. So that was probably one of the reasons it helped spread so quickly. And then the buildings themselves became the fuel for the fire. They were really hot. Buildings were built really close to each other, flames could jump from house to house. And that’s why it was able to spread so rapidly through the town and why people had very little time or warning to evacuate and what made it such a devastating event.

MBS:

Yeah, just devastating and really one of the top devastating hazard moments of the year.

JS:

Definitely. Absolutely.

MBS:

So if we take a look back at some of those big losses of the year, you mentioned the Turkey earthquake. We talked a little bit about Hurricane Idalia. We’ve got the Lahaina fire. When we look at all of these events, what can we learn from these events? I don’t just want to just talk about how bad they were. What can we learn from events like this?

JS:

Yeah, I think one of the lessons we can take away from the events we saw this year, it’s actually something we learned a little bit during Hurricane Ian back in 2022, and that’s the effectiveness of building codes when it comes to mitigation.

MBS:

Okay.

JS:

So we are, not just we in the U.S., across the globe in areas that are prone to particular disasters, make a lot of effort to strengthen building codes, whether that be for ground shaking against earthquakes or wind design speeds for hurricanes. So these building codes are well-studied and implemented.

One of the issues has to come down to enforcement.

MBS:

Of course.

JS:

So if building code enforcement isn’t widespread, then you’ll have entire buildings collapsing. That’s what we saw during Turkey. Some of the issues had to do with the building code enforcement or some building practices that weren’t necessarily up to code. And that’s why you had such widespread devastation.

MBS:

Yeah.

JS:

The other thing we learned, this has to go back… I mentioned earlier in the podcast a concept called rapid intensification. So that’s a phenomenon for hurricane strengthens 35 miles per hour where max of seeing wind speeds increase by 35 miles per hour in a 24-hour period. It’s called rapid intensification. We saw that a number of times this year in 2023, sorry, in 2023, which is nothing new. Rapid intensification, it’s not a new term, it’s been around. But the speed of which some of the hurricanes this year rapidly intensified, way more than just 35. Hurricane Otis in Acapulco, Mexico, that was…

MBS:

Explosive.

JS:

… explosive rapid intensification, incredible to the point where it wasn’t captured in the forecast models and it caught everyone off guard there in Acapulco. Emergency management, any personnel people on the ground were caught off guard.

So I know there’s a lot of research going into being better at modeling rapid intensification just for emergency preparedness, but we also into our models we’re developing here at CoreLogic, it’s a concept that we’ll have to study and implement better because it seems to becoming a much more common occurrence.

MBS:

Sure, yeah. I think the one thing that we know about natural catastrophes is there’s a lot we don’t know. And we’ve learned so much from every event that does happen. And from our perspective is we build those new findings into our models and into our data so that we can capture them better to better represent them.

ES:

Before we end this episode, let’s take a break and talk about what’s currently happening in the world of natural disasters. CoreLogic’s Hazard HQ Command Central reports on natural catastrophes and extreme weather events across the world. A link to their coverage is in the show notes.

2024 began with a shallow magnitude 7.5 earthquake hitting western Japan on January 1. CoreLogic estimates that insured losses in Japan due to damage from ground shaking, fires following, tsunamis and liquefaction could be between $1 and $5 billion. Initial Japanese reports indicate material damage in the smaller towns and cities nearby the Noto Peninsula, such as Wajima and Suzu. The mayor of Suzu said that over 90% of the 5,000 homes in the city may have been damaged or destroyed. However, the earthquake spared major economic centers, like Tokyo, reducing the loss potential from this event.

Then on January 8, multiple tornadoes formed along the Florida panhandle causing significant damage and disruption to homes and businesses. CoreLogic Hazard HQ Command Central estimated that 26,617 single- and multifamily homes were potentially impacted by tornadic winds in Florida, southeastern Alabama, and southwestern Georgia. Then in mid-January, an Arctic blast swept across the U.S. setting record low temperatures.

MBS:

So I guess as we go through 2024, our listeners who listen often they’ll know that you will be back again. We do bring you back whenever anything bad does happen. It doesn’t mean you’re our bad news guy, but we do appreciate you keeping track of all the disasters that are happening around the world. And what can people expect to hear from you this year, John, and where can they find things out?

JS:

Well, I always invite people to go to our website, hazardhq.com. That’s where we keep up to date on all natural disaster activity across the globe. We’ll provide our event summaries and if there’s any losses or data we can provide from CoreLogic’s treasure trove of data, that’s where it’ll be. Like you said, I’ll be back on. Anytime there’s a big earthquake or a big hurricane, I’ll be back to talk about it on the podcast.

MBS:

Well, we look forward to having you back, John. Thank you so much for joining me today on Core Conversations: A CoreLogic Podcast.

JS:

Of course. Thank you for having me.

MBS:

All right. And thank you so much for listening. I hope you’ve enjoyed our latest episode. Please remember to leave us a review and let us know your thoughts, and subscribe wherever you get your podcasts to be notified when new episodes are released. And thanks to the team for helping bring this podcast to life, producer Jessi Devenyns; editor and sound engineer, Romie Aromin’ our facts guru, Erika Stanley; and social media duo, Sarah Buck and Makaila Brooks. Tune in next time for another Core Conversation.

ES:

You still there? Well, thanks for sticking around. Are you curious to know a little bit more about our guest today? Well Jon Schneyer is the Director of Catastrophe Response here at CoreLogic. Jon aims to keep CoreLogic clients informed of weather risks by monitoring potential events, determining the scope of the response, coordinating with internal stakeholders and providing up-to-date content. You can read more of his event response coverage on hazardhq.com. The link is in the show notes!

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