Where are all the hurricanes?

Having had a dramatic start to the year with Hurricane Beryl, things have suddenly got surprisingly quiet in the Atlantic. So quiet that we are seeing new records for inactivity – it’s the longest stretch in more than half a century without a single late-summer hurricane according to the Washington Post.

There are still 2 months of storm season ahead of us, but this lull in activity has got some people scratching their heads because this was almost unanimously expected within the scientific community to be a higher-than-normal season. So should we call the forecasts wrong, or should we sit back and reflect that a forecast is only a probability of something happening and not a certainty?

Conditions such as high sea surface temperatures and other climate characteristics were expected to drive the increased frequency and severity of hurricanes. It’s still not completely clear why the US East Coast has been largely damage-free so far, but as Paul Wilson of Securis Investment Partners mentioned in our event in July, unusual activity in West Africa (dust storms and monsoons) has had some mitigating effect. You can see that discussion and others on the topic from insurers Inigo and Apollo here, or read a summary here.

But hang on – we live in a dynamic world and we’ve been out asking more of our friends in the forecasting world what is going on via a post on LinkedIn. If you want to dig deeper into what is happening and maybe even contribute to the debate yourself, then we recommend the evolving discussion that you can find there. In the LinkedIn post comments, you will see an excellent summary from Steve Jewson about why the forecast is not “wrong” but we are looking at the edge cases. We are also delighted to have a contribution in that post and a helpful video from the TikTok meteorologist Cyrena-Marie Arnold.

It will be November before we can claim this as a true “quiet” season but for now, another reminder that when it comes to trying to predict the future impact of client conditions, short-term forecasts need to be understood in the context of seasonal variability and unexpected, distant localised conditions.

Managing the rapidly changing climate cycle – from one week to 25 years: the inside view

On 23rd July, InsTech hosted an event in collaboration with EigenRisk and Reask to explore the latest developments in short-term climate modelling. The session featured insights from insurers and climate experts on topics such as shifting hurricane patterns, advances in predictive modelling and strategies for businesses to manage evolving climate risks. Visit our website to read our write-up from the event, or to watch to the full event on-demand.

Floodbase: Addressing large-area flood insurance gaps

Floodbase is addressing underinsurance in flood-prone industries by enabling parametric flood insurance products that cover economic losses from business interruption, land damage and clean-up costs. These products offer payouts based on the extent of flooding, helping businesses, governments and industries like agriculture, tourism and manufacturing recover from large-area flood events.

Events of interest

Are you working for an insurer or broker and intrigued about hail risk? Do you want to meet up with peers from similar companies? If so, come and join us for our Catastrophe camaraderie summer meetup – “hail yes!” on 19th September, focusing on the rising frequency and severity of hailstorms. In collaboration with Swiss Re, it’s a chance to hear some scientific and modelling discussions and have an informal catch-up with new friends and old as we explore new research and data.

If you missed our last webinar on property in July – or if you want to take another look at Climate and property blind spots revealed: making the right decision at the right time, click the link to see Matthew Grant talking to our panellists from CoreLogic and reinsurer Swiss Re. Topics discussed include real-time data, algorithmic underwriting and the use of predictive models for climate risk assessment, focusing on improving underwriting, claims processes and addressing renewable energy risks.

Climate and Cat Risk news

Toronto floods and Jasper fires drive over $1.8bn in insured losses

Flash flooding in Toronto and southern Ontario in July 2024 caused over $940 million USD in insured damage, while the Jasper wildfire resulted in insured losses exceeding $880 million USD, according to estimates from Catastrophe Indices and Quantification Inc. (CatIQ).

Moody’s RMS estimates Hurricane Debby insured losses at under $1.5bn

Moody’s RMS estimates that US private market insured losses from Hurricane Debby will not exceed $1.5 billion USD, with additional National Flood Insurance Program (NFIP) losses below $300 million USD. The estimate accounts for wind, storm surge and inland flooding impacts.

Global flood risk set to rise

Fathom compares present-day inland and coastal flood risk with projections for 2050 and 2100 under different climate scenarios. Using the 30m high-resolution FABDEM model, the research shows that global flooding could increase by 49% under a high emissions scenario (SSP5-8.5), while a low emissions scenario (SSP1-2.6) could limit this increase to 9%. JBA Risk Management shows variability in future flood risks in Europe, with surface water and river flooding expected to intensify in most regions by 2050.

CoreLogic: 2.6 million homes at risk of wildfire damage in 2024

CoreLogic’s 2024 Wildfire Risk Report estimates that over 2.6 million homes in 14 US states face moderate to very high wildfire risk, with a potential reconstruction cost of $1.3 trillion USD. The report highlights the benefit of mitigation, showing that both individual and community-level actions can reduce expected property losses by up to 75%.

Previsico: Majority of businesses lack flood action plans

According to Previsico, 54% of public and private companies do not have flood action plans in place despite the increasing flood risks driven by climate change. Flooding can cause significant financial damage, with 40% of small businesses failing to reopen after major flood events. Previsico’s data shows that 70% of commercial flood losses could be mitigated with advanced flood warnings, allowing businesses to prepare and reduce potential losses.

Industry updates

Cytora partners with GeoSmart Information on flood risk data for insurers

Cytora has partnered with GeoSmart Information to integrate flood risk data into its digital risk processing platform. This collaboration aims to provide insurers with flood risk assessments to develop underwriting, claims certification and pricing decisions in the face of increasing climate-related flood risks.

Guidewire releases wildfire risk data for US states

Guidewire has announced the availability of its HazardHub Enhanced Wildfire Risk Score, offering data and maps to assess risks across the US. The data identifies top states for wildfire risk, based on the percentage of homes rated as high risk. The score incorporates factors such as vegetation, proximity to fire stations and historical wildfire data to provide an assessment for insurers and homeowners

Aon partners with Future Climate to support voluntary carbon market

Aon is collaborating with Future Climate to scale the voluntary carbon market by providing insurance coverage for carbon projects against risks such as non-delivery of carbon credits due to natural catastrophes. This partnership aims to attract institutional investors by offering risk management solutions and improving project transparency and integrity in the voluntary carbon market.

The Demex Group raises $10.25m for climate reinsurance solution

The Demex Group has secured $10.25 million USD in funding for its parametric reinsurance solution, designed to address financial risks from severe convective storms. The solution offers coverage for insurers against weather events intensified by climate change. $65 million USD of reinsurance has already been secured during initial sales.

McKenzie Intelligence Services (MIS) sees growing demand for GEO platform amid rising catastrophe losses

The increasing frequency of natural catastrophe events, with annual insured losses exceeding $100 billion USD, is driving the need for tools such as McKenzie Intelligence Services (MIS)’ GEO platform. GEO provides real-time disaster response data, enabling insurers to assess damage and expedite claims processes.

Canopius provides insurance for CO2 transport and storage projects

Marsh has introduced an insurance product for carbon capture and storage (CCS) projects, covering CO2 transport and geological storage. The solution, underwritten by Canopius, includes non-damage coverage for CO2 leakage and the associated costs, such as corrective measures and carbon credits.

NormanMax expands coverage for climate and natural catastrophe risks

NormanMax Insurance Solutions has introduced parametric reinsurance products for earthquake risk in Chile and hurricane risk in North and South Carolina. NormanMax has also partnered with ManageMy with a simple form of parametric insurance to help close the natural catastrophe protection gap.

Zurich launches Climate Resilience Alliance to expand its focus on climate hazards

The Zurich Flood Resilience Alliance has transitioned into the Zurich Climate Resilience Alliance, broadening this initiative beyond floods to address a wider range of climate hazards such as heatwaves and wildfires. The alliance, led by Zurich Insurance Group and the Z Zurich Foundation, continues its work with partners to assess and improve resilience in vulnerable communities.