General Insurance Article - Quiet hurricane season raising false sense of security


Record sea-surface temperatures spell hot water for insurers, according to a new insurance sector report from Bloomberg Intelligence (BI). Insurers and reinsurers like Swiss Re and Munich Re face the threat of higher catastrophe claims from a weakening El Niño and rising sea temperatures, for which recent price hikes may be insufficient.

 Record sea-surface temperatures drove above-average 2023 storm formation, yet wind shear restricted the number of hurricanes making US landfall.

 The 2023 Atlantic hurricane season featured an above-average number of storms and was characterized by record-warm sea-surface temperatures and a strong El Niño, notes BI. There were 20 named storms last year, the fourth greatest in a single year since 1950. Of these, seven developed into hurricanes and three into major hurricanes (category 3 or above).

 That compares with the 14 named storms in an average season (including seven hurricanes and three major hurricanes). Yet vertical wind shear (related to the Pacific jet stream) restricted those making landfall. Hurricane Idalia was the only hurricane to strike the US, coming ashore as a category 3 hurricane in a low population area near Keaton Beach, Florida. The eastern Pacific also experienced a high number of storms -- 17 of which were hurricanes and eight major hurricanes.

 Insurers Lulled by 2nd-Fewest West Pacific Typhoons Since 1951

 Charles Graham, BI Senior Industry Analyst – Insurance, said: “El Niño didn't drive above-average cyclone activity in the West Pacific in 2023, contrary to expectations. The region endured 17 named storms (including Dora which crossed the East Pacific dateline). The only year to have had fewer named storms since 1951 was 2010, with 15.

 “Twelve of the storms became typhoons including eight major typhoons. Mawar (the first category 5 typhoon of the season) passed close to Guam. Doksuri (the most destructive West Pacific storm in 2023) came close to the Philippines as a category 4 cyclone, before causing heavy rain and flooding in Taiwan and eastern China. Hong Kong still experienced record rainfall and flooding in September and October 2023 in the aftermath of super typhoon Saola, tropical cyclone Haikui and severe typhoon Koinu.”

 North Atlantic Sea-Surface Temperatures Reach New Highs

 Global sea-surface temperatures from April through December were the highest ever for those months since records began in 1850, notes BI. The North Atlantic was subjected to a strong to severe marine heatwave in June, which swept through the Mediterranean basin in July. In the North Tropical Atlantic, the heatwave continued to increase in intensity through the summer, with the western part of the region moving from moderate to strong warming conditions. The tropical Pacific was also affected by an intensifying heatwave in the eastern part of the basin, corresponding to the strengthening of El Niño.

 Record sea surface temperatures contributed to above average levels of storm formation in the Atlantic, Eastern North Pacific and Indian Ocean. Convective storms brought hail and flooding to many regions.
  

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