Insurers around the globe currently have their attention firmly fixed on addressing the enormity of client claims relating to COVID-19 but is there another dark cloud gathering on the horizon?
Recent scientific information includes NOAA issuing their forecast on May 21st indicating a 60% chance of an above-normal season with 13–19 named storms, 6–10 hurricanes, 3–6 major hurricanes, and an ACE index between 110% and 190% of the median. They cited the ongoing warm phase of the Atlantic multidecadal oscillation and the expectation of continued ENSO-neutral or even La Niña conditions during the peak of the season as factors that would increase activity.
On June 4, Colorado State University released an updated forecast, estimating 19 named storms, 9 hurricanes, and 4 major hurricanes only to update on July 7th now estimating 20 named storms, 9 hurricanes, and 4 major hurricanes. Also on On July 7th Tropical Storm Risk released an updated forecast estimating 18 named storms, 8 hurricanes, and 4 major hurricanes. On July 16th The Weather Company released an updated forecast, estimating 20 named storms, 8 hurricanes, and 4 major hurricanes.
These forecasts are well above the 30-year (1981-2010) average of 13 named storms, seven hurricanes and three major hurricanes. It also includes the six named storms that have already formed this season through Fay, so they expect another 14 named storms to form through the end of the hurricane season.(i)
“The entire tropical ocean is above average,” says Michelle L’Heureux, a forecaster at the U.S. Climate Prediction Center. “And there is a global warming component to that. It is really amazing when you look at all the tropical oceans and see how warm they are.”(ii)
The fact is that warm south Atlantic seas are the breeding bed of severe storms and current analysis demonstrates a worrying view of current temperatures for this year’s storm season, a season that has already started many weeks earlier than usual.
So the omens are not good for the industry and therefore being prepared will be key for Insurers and their service suppliers.
The questions that we must ask ourselves are not only around capacity and preparedness but also now about loss location access and PPE.
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