Despite the brief respite from hurricanes hitting the U.S. coast in 2006, carriers can expect an increase in storm losses in the coming years, according to two reports issued this week.

Rick Clinton, president of Oakland, Calif.-based EQECAT Inc., said during the “near-term” of the next ten years the storm risk will be higher than the long-term average derived from more than 100 years of data.

“We believe this assessment should be considered by insurance companies, policyholders, rating agencies, investors and regulators as we move through future hurricane seasons,” he said.

Along the same lines, ReAdvisory, the analytical arm of the Chicago-based reinsurance intermediary Carvill, issued a report warning of elevated hurricane activity in the coming decade.

Steve Smith, an atmospheric physicist and senior vice president of ReAdvisory, concluded that 2006 was merely an average year, despite forecasts that it would be higher than normal given the expectation of above-average sea surface temperatures in the Atlantic, which usually prompt increased hurricane activity.

Although sea temperatures were warm, high levels of wind shear and the formation of an El Ni?o combined to suppress hurricane activity, he said.

“In almost every category of storm, 2005 had at least double the number of storms seen in 2006,” Mr. Smith said. “Indeed, there were only two named U.S. tropical storms that hit land throughout 2006, compared with seven in 2005.”

Scientific debate continues to be divided on whether or not the warming of Atlantic sea surface temperatures is created by a warming and cooling cycle or a linear combination of global warming and aerosol cooling. But the report makes one thing clear: the warming of sea surface temperatures is set to continue.

“Based on published scientific studies, insurers and reinsurers can expect heightened levels of hurricanes to continue for another 10-20 years minimum,” Mr. Smith concluded.

Mr. Clinton noted that many scientists have observed a cyclical trend in hurricane activity over the last 100 or more years. “This trend correlates well with the Atlantic Multidecadal Oscillation (AMO) phenomenon, and strongly indicates that we are in a period of increased hurricane activity that could last for five, ten or even more years,” he said.

Special Reports /

More Storms Seen In Near Term

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