No, Frozone didn’t freeze Texas!

First, before anyone accuses me of being too cheeky with this post, the events in Texas are terrible. I am not making light of them. I know several people there with frozen pipes and that was not something they ever imagined having to deal with.

What’s unfortunate about the events of the past week is they are perceived as being unknowable, but they were completely predictable. This wasn’t caused by Frozone and Mr. Incredible getting carried away trying to stop a bad guy.

Texas has had similar issues twice in the last 30 years, even if on a smaller scale. The government was well aware of the problems with the grid and never did anything about it.

It is no different that Florida playing Russian Roulette with the FHCF or how the Federal government rolled the dice with Fannie and Freddie.

One of my great frustrations as a student of this industry is so many of the large cats during my career were completely preventable. OK, not preventable in that the weather event could have been avoided, but the losses were amplified significantly by lack of preparation.


Let’s take inventory. Why don’t we start with Katrina. I had been worried about a New Orleans event for a few years before Katrina. Why? Because I read about the levees and I knew New Orleans was below sea level.

It’s not rocket science. All the facts were widely available. It was just a matter of when. And yet the industry was completely unprepared for it when it came.


After Katrina, I became admittedly a little obsessed with finding out about other underestimated perils. The most obvious one was New York City.

You could go look up the prior events (not just 1938 but the Hog Island event before that and 1821 as well) and then go figure out where the low lying land was and you ended up circling Battery Park on the map.

It was just a matter of time. I wasn’t the only voice predicting doom but were New Yorkers aware of the risk?

Of course not because nobody in a position to do anything about it seemed to care. I even predicted the subway would flood out (admittedly an easy prediction, but none of the insurers who wrote the MTA seemed aware)!

California Wildfires

We could have a big long post about all the various reasons there may be more damaging wildfires than decades ago. However, the real issue is the change in attitudes towards fire risk.

As the risk of fire went up, new construction moved closer to the forests. And, sadly, these new developments were built without adequate fire evacuation plans.

Or, if there were adequate plans conceived, the construction of the roads got tied up in red tape by California. Thus, what could have been manageable events ended up taking out towns like Paradise. It could have easily been prevented.

Japan Earthquake

This one isn’t quite as obvious admittedly, but the great Sendai quake from ten years ago was considered a shock at the time because it wasn’t on the official Japanese quake maps.

However, there was research prior to the quake that discovered a similar event had occurred there over 1000 years ago. It should have been on the map. That wouldn’t have prevented the quake, but it may have resulted in a better response.

What’s Left To Come

So is my list exhausted? Hardly. I mean if New Madrid ever happened again it would be a disaster beyond imagination, but let’s try to pick ones less remote.

I’ve written before about Seattle. If you live in Seattle, you really should read it. And you might want to consider moving. It is the most underappreciated risk in the US and perhaps the world.

How about the Sacramento flood event? Never heard of that one? Well, Sacramento has levees to protect against extreme snow melt. Like New Orleans, the levees aren’t going to hold when the big event arrives. It’s going to be a disaster. It’s only a matter of time.

Tampa. Fortunately, it is hard to get a direct hit on Tampa Bay. However, if a storm like Irma manages to come from the south and then do a right turn into the bay, the impact would be unimaginable.

The shape of the bay essentially squeezes all the water right towards downtown and storm surge could easily surpass 20 feet. Floridians are at least aware of the general hurricane risk, but the downtown area specifically is not protected and hard to evacuate quickly.

Back to Texas

OK, with that tour around the world, hopefully I’ve drilled the point home. Weather events are going to happen. There is nothing we can do about that. What we can do is try to prepare for them in advance (you can add pandemics to that list too!).

Unfortunately, the will often isn’t there. As I mentioned, Texas has known about these problems with the grid for thirty years. Insurers should have known about them and prepared, but look at the list above…we know that’s never going to happen.

However, when insurers don’t prepare, the penalty is they pay more in claims. When cities and state don’t prepare, their residents can lose their home, their possessions, or even their lives. This is inexcusable.

Frankly, if I were an insurer in Texas, I’d be looking into what similarities there are between this situation and California, where the insurers were able to collect subrogation against PG&E.

If ERCOT is responsible for the magnitude of this event, why shouldn’t they pay the insurers back for losses caused by the lack of power? If any of you pursue this approach and collect, yes, I expect a hefty finder’s fee. You’re welcome!

Of course, nobody paid the insurers for the government’s negligence of New Orleans’ levees so maybe this is just wishful thinking.

Anyway, the real point is the industry needs to do a better job evaluating the loss amplification risk from mismanagement. It happens over and over and over again and it never gets priced for properly.

The information is out there. The industry needs to be more proactive in researching it. Defaulting to “we used what RMS had in the model” isn’t a good excuse. It’s actually willful negligence.

Figure this stuff out before everyone else does. Be a hero! You know, like Frozone!

Postscript: Mattress Mack Saves the Day

Speaking of heroes, our old pal and reckless gambler Mattress Mack bought himself a lot more good publicity than his typical “free furniture if a team wins a championship” promotion.

Mack opened his furniture store to people without heat and was able to help over 1000 people. This is a much better way to burnish his image than making crazy bets on the Astros. Good job, Mack!