By Joel Berg
As he watched the images of sea water gushing into New York City's subway in late October, a chilling "what-if" crossed the mind of Rodney Schraven, risk management director for the Metro in Washington, D.C.
If Superstorm Sandy had roared up the Chesapeake Bay, it might have pushed enough water to flood the Metro tunnels.
"I thought, 'There but for the grace of God goes WMATA,' " Schraven said, using the acronym for the Washington Metropolitan Area Transportation Authority.
Metro braced for Sandy by sandbagging low-lying air vents and stations, moving rail cars to safer locations and suspending operations. But the storm headed further north, inflicting billions of dollars in damage to public transit systems in New York and New Jersey.
But transportation officials in Washington and other cities that dodged the storm won't entirely escape Sandy's wrath. They could face challenges as they renew insurance policies. As a result of both the storm and a hardening market in general, coverage limits may fall, premiums may rise, and markets may take more work to find.
"The underwriting process is going to be more difficult," said Daniel Bancroft, a senior vice president and transportation leader for brokerage firm Willis. "Underwriters aren't just going to do what they've always done."
And even though Sandy spared systems outside New York and New Jersey, experts say it is only a matter of time--and rising sea levels--before storm-driven floods strike other cities. Indeed, a recent report suggests one of Boston's subway stations might have flooded during Sandy if the storm had arrived a few hours later, at high tide.
It's not just coastal metropolises that face climate-related risks. A 2011 report by the Federal Transit Administration, titled "Flooded Bus Barns and Buckled Rails," details damage from extreme heat and flooding to transit systems in Nashville, Tenn., Portland, Ore., and other cities.
Transit systems can shrug off regular weather events with little harm, said Jean-Paul Rodrigue, a geography professor at Hofstra University, who has written about threats to public transportation. The dramatic events associated with climate change pose a bigger challenge, particularly if they hit harder and more often.
"It doesn't mean it's going to happen," Rodrigue said. "Nothing could happen over the next five years, but it's a risk. The risk is simply higher."
The risks were not unknown before Sandy. Researchers had warned that New York's web of underground tunnels was increasingly vulnerable to storm surges.
All told, the New York Metropolitan Transportation Authority sustained nearly $5 billion in damages, according to the authority's former chairman, Joseph Lhota, in testimony before the U.S. Senate in December. "We experienced a level of destruction that is completely unprecedented in our 108-year history," Lhota said, ticking off damage to stations, tunnels, signals, rail yards and maintenance shops.
At a January board meeting, MTA officials estimated the system's exposure for Sandy-related expenses not reimbursed by government and private insurance at about $950 million.
The MTA is reportedly self-insured. In materials prepared for board meetings, officials wrote that they expected "substantial recoveries from business interruption/extra expense insurance coverage and federal sources." An MTA spokesman declined to answer specific questions about the organization's insurance program but confirmed a business interruption loss of $268 million.
Across the Hudson River, New Jersey Transit sustained $450 million in damage, including $100 million in flood damage to engines and rail cars.
The rolling stock was insured, as was other property. The system's primary insurer, Lexington, has already paid out $50 million, said Luis Higgins, the system's senior director of risk management and claims administration.
NJ Transit does not insure its rail lines and overhead wires, which likely will be repaired using federal funds, Higgins said.
Insurance carriers likely will reevaluate their exposure following Sandy, Higgins said. But he was confident NJ Transit would secure adequate coverage. Its program includes more than 27 insurance companies.
"There is talk that many of the insurers will, on an individual basis, cut back the limits that they're prepared to offer," Higgins said. "However, there is sufficient capacity for other insurers to participate, so we may have an increase in the number of insurers in our program but have the same limits and the same coverage."
Other transit systems around the country expect similar challenges.
"I think it's pretty certain that, spending the same dollars, we're not going to be able to purchase the same limits as we had in the past," said Barbara Dunlop, property and casualty manager for Miami-Dade County in Florida. The policy covering the county's transit system renews April 15.
Flood insurance may simply become too expensive for older systems in the Northeast, brokers said. But other systems, concerned that their flood risks are rising, might up their coverage, said Richard Famigletti, an area vice president in the public sector niche for Arthur J. Gallagher & Co.
"Some of that began in 2011 with Irene," Famigletti said. "It caused some major flooding in areas that don't typically flood."
In addition, transit systems should scrutinize how their policies define flooding, added Richard Milone, chair of the insurance recovery practice at law firm Kelley Drye & Warren in Washington, D.C. Many businesses discovered they weren't covered for damage caused by Sandy.
"I think in the renewal season for 2013, there are going to be a lot of interesting discussions among policy holders and brokers and insurance carriers," Milone said.
Post-Sandy, transit officials also have been eyeing ways to safeguard their systems.
In Washington, D.C., for example, Metro could raise ventilation shafts and revamp station entrances so they can be sealed off, especially in flood-prone areas like the National Mall, Schraven said.
"There are fixes for it, but they're very, very expensive," Schraven said, noting that other issues compete for resources and attention.
Transit systems also are trying to mesh climate adaptation into planned maintenance work.
In a project funded by the federal government, for example, Philadelphia's public transportation system has been examining what to do on a rail line that follows the Schuylkill River, north and west of the city's downtown.
Floods occasionally shut the line, most of which is less than 10 feet above river level, said Erik Johanson, strategy and sustainability planner for the Southeastern Pennsylvania Transportation Authority. And floods appear to be more frequent: 10 of the 18 highest water marks along the line have occurred since 2003, said Johanson, citing data from the National Oceanic and Atmospheric Administration.
The data has been incorporated into two scheduled projects: the replacement of signal huts and the construction of a turn-back, which allows trains to continue service by avoiding washed-out tracks.
The new signals were placed on steel stilts about five feet higher than they would have been otherwise. And the turn-back was built near a suburban station outside the flood zone, Johanson said, adding that there was little additional cost. "The key is that it's work that was already going to be done," he said.
As the climate changes, however, it is difficult to say what will be high enough--and what transit systems can do on their own.
In New York, infrastructure that today is underwater only during 100-year storms may be underwater during storms every other year by the 2080s, said Klaus Jacob, a researcher at Columbia University who forecast the kind of flooding that hit New York during Sandy.
New Yorkers have been debating the construction of sea walls that could cost tens of billions of dollars, Jacob said. But water might eventually spill over the top anyway, especially if nothing else is done to address climate change, he said.
"We simply have postponed the problem," Jacob said, "rather than solved the problem."
Another solution could be finding ways to channel water safely during storms, said Julie Wormser, executive director of The Boston Harbor Association. Earlier this year, the group issued a report on growing flooding risks in Boston.
Seoul, South Korea, for example, has park-like areas engineered to carry off excess water after summer downpours, Wormser said. "It's less about extreme storms and more about living with water and what do you do to adapt."
JOEL BERG is a freelance writer and college professor.
April 16, 2013
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