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Repeat of 1927 Great Mississippi Flood Could Cost
up to $160 Billion
Newark, Calif. – May 14, 2007
– A repeat of the 1927 Great
Mississippi Flood – the largest flood disaster in U.S. history – could
cost up to $160 billion in economic damages if it were to recur today,
according to Risk Management Solutions (RMS), the world’s largest
catastrophe risk analysis company.
A new study by RMS, published on the 80th anniversary of the Mississippi
Flood, shows that in a repeat of this flood today, the losses would be
between $130 and $160 billion. Almost two-thirds of this total would be
a result of residential damage, with another third from damage to
commercial and industrial properties. While there would be some damage
to all the states along the lower Mississippi River, Louisiana would
sustain nearly 40% of the total loss.
Although the extreme river flows that led to the 1927 flood are rare
events, research suggests that climate change and global warming are
already increasing the potential for exceptional flows on great river
basins such as the Mississippi. This has an impact on how flood risk
should be managed and how levees need to be maintained and strengthened.
“Levees have been built stronger and higher since 1927, but the bed of
the Mississippi River has also risen in many places,” commented Dr.
Robert Muir-Wood, chief research officer at RMS. “With stronger levees
there should be fewer failures, but as we saw in New Orleans after
Hurricane Katrina, relatively short sections of levee failure can have
truly catastrophic consequences — the taller the levee, the greater the
speed and force of the flooding. ”
In contrast to the 1927 flood, where no compensation was available for
those who lost homes and businesses within the flood extent, the
National Flood Insurance Program (NFIP) would cover a portion of the
loss if it were to recur today. “Based on the existing level of NFIP
take-up, around 80-85% of the loss would be uninsured,” noted Dr.
Patricia Grossi, senior researcher at RMS. “This is a higher uninsured
loss than resulted from Hurricane Katrina.”
Consequently, it is likely that private insurers would face significant
pressure to pay part of the flood loss under the terms of fire insurance
coverage, and they could be confronted with lawsuits claiming that
damage was caused by levee failure, debris damage, or contamination
rather than simply flood inundation. There would also be significant
political fallout from a disaster of this magnitude in the lower
Midwestern states, with the majority of the people in the affected area
being forced to relocate or live in temporary accommodations.
The 1927 flood, which inundated parts of Arkansas, Illinois, Kentucky,
Louisiana, Mississippi, Missouri, and Tennessee, killed some 250 people
and caused approximately $250 to $350 million in loss at the time. “With
the economic and social changes that have occurred along the Mississippi
River since 1927, a modern-day event would not just be a regional
economic catastrophe but a national disaster,” said Dr. Grossi.
Click on the following link to download the full report:
http://www.rms.com/Publications/1927_MississippiFlood.pdf
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