A defined correlation exists between elevated sea surface temperatures and overall hurricane activity in the Atlantic basin, according to a white paper published today by a leading catastrophe modeler.

But the researchers at Boston-based AIR Worldwide Corp. said there was difficulty using that finding to pin down certain loss projections.

The paper comes as the insurance industry eyes the onset of the 2006 hurricane season in three weeks, and follows on the heels of last year's record catastrophe losses.

"Our analyses confirmed the correlation between elevated sea surface temperatures and overall hurricane activity in the Atlantic basin," said Karen Clark, president and chief executive officer of AIR Worldwide Corp.

But there remains considerable uncertainty in the expected magnitude and time horizon of potentially elevated risk along the coastline and, most importantly, the impact on regional insured losses, she cautioned.

The white paper reviews the current state of research on climatological impacts on hurricane activity and explains the approach used to create AIR's near-term sensitivity catalog, which quantifies the influence of sea surface temperature forecasts on insured losses for the next five years.

The result of more than eight months of research by AIR's scientists, in collaboration with Accurate Environmental Forecasting, is reflected in a near-term catalog of potential hurricane activity that will be released by AIR later this month.

For the 2006 hurricane season, AIR will offer three stochastic catalogs for its U.S. hurricane model: the standard catalog, which is based on over 100 years of historical data and over 20 years of research and development; a near-term sensitivity catalog, which reflects recent research on the influence of sea surface temperatures on near-term (five years) hurricane activity; and a 2006 seasonal hurricane catalog that accounts for the influence of current climate signals on hurricane activity for the upcoming season.

Ms. Clark said insurers should still use the standard AIR U.S. hurricane model "until scientists better understand the relationship between elevated sea surface temperature and landfalling hurricane activity."

For the near term, however, companies may use the catalog developed by AIR and AEF for sensitivity analyses, she added.

Special Reports /

Sea Temp Data Won't Predict Hurricane Loss

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