This morning we reported that Travelers will post a second-quarter operating loss, owing to more than $1 billion in catastrophe losses. It's hard to resist the conclusion that many more such announcements will emerge from carriers throughout the year. This week saw several natural disasters to add to those that have already accumulated since Jan. 1, and Atlantic Hurricane Season has only just begun.
As the story referenced above reports:
Even without a major hurricane having made landfall, insurers are on track to post their largest catastrophe losses ever, due largely to earthquakes in Japan and New Zealand and a series of once-in-a-century tornados.
The least of disaster news this week was of a brush fire in West Miami-Dade that so far has consumed more than 50,000 acres. In the Western United States, a fire of near-historical proportions burns in Arizona, with terrible and spectacular results. In South America, Chile's majestic Puyehue volcano has erupted, jamming up Chilean and Argentine airports and yielding images of enormous ash clouds rising into the atmosphere, and ash-covered streets in Chile's Lake District and Argentina's resort city of Bariloche.
This week I happened to fly over the Western United States several times and saw only quiescent volcanoes, but observed something else of significance on the prominences of the Cascade and Rocky Mountain ranges: an enormous and highly unseasonable amount of snow remains trapped in the Mountains of the West.
The significance of this excessive snowpack is yet to be felt, whether in terms of insurance or economic losses. High levels of precipitation have already caused widespread flooding in the Mississippi River system, straining flood control infrastructure. According to one article, flooding in New Orleans could be massive if officials don't open the Morganza spillway. Their reluctance to do so is because of other downstream problems the increased volume of water in the river will cause, as explained by Louisiana Governor Bobby Jindal:
"Based on various inundation maps, you're looking at roughly 3 million acres that will be impacted, be underwater," when the floodway opens, Jindal said. "That includes about 18,000 acres of cropland just within the Atchafalaya basin."
At the other end of the system a similar Catch-22 faces officials, according to Bernard Shanks, an adviser to the Resource Renewal Institute who has studied the six main-stem Missouri River dams for more than four decades. He warns of a "very real threat of a flood that will leave St. Louis in chest-high water." Shanks explains:
Six old, huge, faulty dams that normally have reserve space for spring snow melt are nearly full now — before the spring floods start. Floodgates that haven't been opened in 50 years have begun to open. Flooding has begun. And the human and economic toll could be ghastly.
Shanks warns of the danger of Northeaster Montana's Fort Peck Dam failing as its engineers prepare to release a record spill of water. The highest of six major dams on the Missouri River, the three-mile wide structure "may be the largest at risk dam in the nation," Shanks asserts. He asks what would happen if the dam were to fail:
Here is a likely scenario: Garrison, Oahe and three other downstream earthen dams would have to catch and hold a massive amount of water, an area covering nearly 250 square miles 100 feet deep. But earthen dams, when overtopped with floodwater, do not stand. They break and erode away, usually within an hour. All are full.
There is a possibility a failure of Fort Peck Dam could lead to a domino-like collapse of all five downstream dams. It probably would wreck every bridge, highway, pipeline and power line and split the heartland of the nation, leaving a gap 1,500 miles wide. Countless sewage treatment plants, toxic waste sites and even Superfund sites would be flushed downstream. The death toll and blow to our economy would be ghastly.
It could be that Shanks warning is over-wrought, but it is hard to imagine that the snow captured in the heights that feed the Mississippi Basin won't exacerbate an already serious situation, especially if suddenly much higher temperatures cause rapid melting.
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio