Recent California flooding losses up to $1.5bn, says Moody’s RMS
Total US economic losses from the California flooding at the end of last year are estimated at $5bn-$7bn, with insured losses between $0.5bn-$1.5bn, according to catastrophe risk modelling firm Moody’s RMS.
This includes losses to the National Flood Insurance Program (NFIP) and the private flood market.
California was hit by a series of extratropical cyclones, with several locations in central California setting three-week rainfall records and certain locations receiving their annual average rainfall totals in less than a month, said Moody’s RMS.
It explained that infrastructure damage was extensive, with state highways and local roads particularly affected due to a combination of flooding and mudslides. The overall economic loss reflects property damage, contents, and business interruption, across residential, commercial, industrial, automobile and infrastructure assets.
Moody’s RMS pointed out that the continuous drought that preceded the extratropical cyclones events, with 2022 the second-driest year in more than 128 years for certain areas such as Santa Cruz, exacerbated the flash flooding and runoff.
Firas Saleh, director, product management, Moody’s RMS, said: “Extreme drought leads to soil compaction, which means less infiltration and more runoff, hence less aquifer recharge and higher risk of flooding. Nowhere is safe from flooding in California today. If we’ve learned anything from this extreme rainfall and subsequent damage, it’s that even perceived low-risk flood zones are still flood zones. If it rains, it can overflow.”
The firm noted that a relatively small proportion of the economic damage is expected to be covered by insurance, with the number of households in California with flood insurance standing at less than 2% – a figure that has been steadily declining.
“To put this event in historical perspective with the 1862 ARkStorm, although some impacted areas are similar, the ARkstorm produced much more severe precipitation – for example, 35 inches (88.9cm) of precipitation in San Francisco compared to around 15 inches (38cm) from this event. Another important mitigating factor for this event is the presence of flood defences, which were mostly absent in 1862,” said Mohsen Rahnama, chief risk modeling officer, Moody’s RMS.
