Intensification tropical cyclones and re/insurance losses growth

Tropical cyclones are expected to become more powerful, leading to heightened rainfall and larger storm surges.

According to MS Amlin, the occurrence of major hurricanes has also grown by 0.5 per decade during the same period. Furthermore, there has been a notable upward trend, with a 5% per decade increase, in the proportion of storms intensifying to Category 4 or higher (see Worldwide Tropical Cyclone Season: Listing of Events & Economic Loss).

Since 1990, there has been a gradual rise in the frequency of North Atlantic hurricanes, with an increase of 0.6 hurricanes per decade, MS Amlin noted in its 2023 Hurricane Season Forecast report.

North Atlantic hurricane season, spanning from June 1st to November 30th, is expected to be relatively normal.

The average forecast predicts a total of 15 named storms, 7 hurricanes, and 3 major hurricanes. This outlook is influenced by models indicating that an El Niño phase, known as ENSO positive, will be present during the peak of the hurricane season.

Munich Re has estimated that, following the North Atlantic hurricane season, overall losses from all storms amounted to around US $110 billion, with insured losses in the magnitude of $65 billion.

Hurricane Ian alone is expected to generate losses of $100 billion, Munich Re said, with $60 billion of these losses to be passed on to private re/insurers.

These insured loss figures exclude losses from the National Flood Insurance Program (NFIP), analysts specified, which is expected to incur costs of $3.5 billion to $5.3 billion just from Hurricane Ian, based on claims submitted so far.

Intensification tropical cyclones and re/insurance losses growth

Reflecting on the 2022 hurricane season has suggested that the year shows a continuation of a trend of growing insured losses, with climate change a clear factor.

This ENSO positive phase is expected to suppress activity. However, warmer sea surface temperatures, which are above the normal range, are likely to contribute to an increase in activity (see Home Insurance Can Make Homeowners Resilient to Weather & Hurricane Loss).

In the Pacific Basin, an above-average season is anticipated due to the presence of the ENSO-positive phase. Forecasts for this region indicate the occurrence of 22 tropical storms, 12 typhoons, and 5 intense typhoons.

From January 1st, 2023, the use of Assignment of Benefits (AOB) has been eliminated due to widespread misuse in insurance policies. Florida now joins 39 other US states in disallowing one-way attorney fee provision for property insurance contracts.

Rapid intensification of hurricanes, which can be attributed to climate change, occurs when specific environmental conditions align.

These conditions include organised hurricane structure, low atmospheric wind shear, and warm sea surface temperatures along the storm’s path. Approximately 90% of the excess heat resulting from human-induced climate change has been absorbed by the Earth’s oceans.

Nataly Kramer   by Nataly Kramer