For first time, severe storm losses through Q3 top $50B
Climatologists, who are getting good at predicting hurricanes and other serious convective storm episodes, accurately predicted an average or moderate Atlantic hurricane season for this year.
Despite falling into that average or moderate category, insured losses from severe storms in the U.S. for the first time surpassed $50 billion through the end of Q3 and accounted for 60% of global insured losses, according to Aon PLC, the London-based risk management giant. P&C insurers in just the third quarter saw at least $4 billion in insured loss events.
“Wildfire and Severe Convective Storms were once again highly prominent, and Aon’s research reveals that both are becoming increasingly costly to insurers, communities and governments,” said Michal Lorinc, head of Aon’s Catastrophe Insight. “In the U.S., around 80% of SCS loss growth can be explained by exposure change – highlighting the need for insurers to understand underlying exposures in their portfolios.”
But it’s not so much the location, frequency and intensity of the storms that’s causing the increasing number of insured losses, although they are certainly factors. Inflation, particularly rising labor and construction costs, as well as supply chain interruptions are huge contributors to the surge in storm losses. And it’s not going to get better, even while predictions indicate only a slightly above average storm season for next year.
2024 storm predictions
Tropical Storm Risk predicts an active hurricane season next year with perhaps 20 named storms, nine hurricanes, and four intense hurricanes. They concluded factors for these predictions such as ongoing warm sea-surface temperatures throughout most of the basin, specifically in the Main Development Region and in the Caribbean Sea, and the current El Niño set to weaken to a neutral stage by August 2024.
El Niño actually had the effect of diminishing or dampening hurricane formation in the Atlantic this year, a trend that won’t exist in 2024. Forecasters have warned that with El Nino coming to an end and global sea temperatures expected to rise, there is a ‘high potential’ for even more hurricanes in 2024.
More alarming, though, is what the climate scientists say is a more frequent “rapid intensification” of storms, in which wind speeds increase at least 35 miles per hour in a 24-hour period.
Each of the three Atlantic major hurricanes underwent a rapid intensification period including hurricane Lee, which intensified about 86 miles per hour in 24 hours in August. Later in the year, Hurricane Otis underwent an even more impressive intensification, increasing more than 100 miles per hour in 24 hours.
Better building techniques sought
“Researchers in meteorology, will attempt to better understand rapid intensification and researchers in engineering and construction will better attempt to find and assay better building techniques to reduce losses in the future,” said Dr. Wesley Terwey, a hurricane risk modeling expert at Verisk, the New Jersey-based data analytics and risk assessment firm.
Luckily, Terwey said, only a few of these rapidly intensifying hurricanes made landfall this year.
Nevertheless, he said, rapid intensification can result in devastating losses.
“Rapid intensification or as it has also been called explosive intensification, is kind of the theme for this year’s tropical season worldwide,” he said.
Nevertheless, Terwey said, the 2023 Atlantic hurricane season was reasonably well predicted, given the competing effects of the warmer sea surface temperatures and developing strong El Niño.
Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at doug.bailey@innfeedback.com.
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