Cargo insurers can expect to face a large exposure value after the recent tanker attacks in the Gulf of Oman.
How Climate Change is affecting the Hurricane season
15 August 2019 | Blog Post
The NOAA (National Oceanic and Atmosphere Administration) has increased the likelihood of an above-normal Atlantic Hurricane season to 45% (up from a previous prediction of 30% that was issued in May).
In addition, the NOAA is predicting 10-17 named storms (winds of 39mph or greater) of which 5-9 will become hurricanes (winds of 74mph or greater) and 2-4 becoming major hurricanes (111mph or greater).
The hurricane season spans a six-month period and as the Hurricane Barry, the first storm of the Atlantic hurricane season has shown, is unpredictable. Barry, with a wind speed of 75mph, is estimated to have inflicted damage of up to $500-900 million.
However, the key factor that is set to determine the course of the hurricane season is Climate Change.
Studies point to Climate Change altering the behaviour of hurricanes with lasting impacts for (re)insurers. Higher sea levels combined with a warmer atmosphere are creating “wetter storms”, where hurricanes are dropping more levels of water.
Similarly, the weakening of the atmospheric currents means that storms “stall and dump” vast amounts of water on places – as was the case with Harvey in 2018. A change that resulted in the closure of the port of Houston, cutting off 17% of US refined output.
Potentially, this could mean that hurricanes - rather than hitting land and moving upstream or downstream - simply hit land and stay. This increases the likelihood of hurricanes landing on a port and inflicting serious damage.
As we move deeper in Hurricane season, the message for (re)insurers is clear. The need to know exposure accumulation has never been greater. Without this, (re)insurers could find themselves with a hefty bill that is even greater than 2017’s.
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