Increase in insurance losses caused by North Atlantic hurricanes in a warmer climate
Abstract North Atlantic hurricanes are a major driver of property losses in the United States and a critical peril for the reinsurance industry globally. We leverage insurance loss data and stochastic modeling to investigate the impacts of projected changes in hurricane climatology on the insurance...
| Published in: | Communications Earth & Environment |
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| Main Authors: | , , , , |
| Format: | Article in Journal/Newspaper |
| Language: | English |
| Published: |
Nature Portfolio
2024
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| Subjects: | |
| Online Access: | https://doi.org/10.1038/s43247-024-01824-7 https://doaj.org/article/c73d7fe3083547ec8889e19dc0d7db78 |
| Summary: | Abstract North Atlantic hurricanes are a major driver of property losses in the United States and a critical peril for the reinsurance industry globally. We leverage insurance loss data and stochastic modeling to investigate the impacts of projected changes in hurricane climatology on the insurance industry, for +2 °C and +4 °C warming scenarios. We find that, relative to the historical baseline 1950-2022, expected changes in wind speed and rainfall may increase hurricane losses by 5% −15% (+2 °C) and 10% − 30% (+4 °C), with greater impacts at lower return periods than in the tail. The historical 100-year loss event may therefore be exceeded on average every 80 years (+2 °C) and 70 years (+4 °C). The expected changes in average annual loss are projected to be 10% (+2 °C) and 15% (+4 °C), with the largest relative increase attributable to precipitation-induced losses. Under the extreme SSP5-8.5 scenario, the expected loss inflation due to climate change is thus on the order of 0.5% per annum. |
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