As the insurance industry continues to wrestle with record-breaking catastrophe loss years and worsening risk conditions, a new report examines how climate change may affect hurricane risk in the U.S. through 2050.
Produced by AIR Worldwide in collaboration with experts from the Brookings Institution and AXIS Capital Holdings Limited, “Quantifying the Impact from Climate Change on U.S. Hurricane Risk“ explores how climate change may influence risks specifically related to financial losses to residential and commercial properties.
While climate change is likely to affect hurricanes in multiple ways, the report highlights two important aspects, says Albert Benchimol, president & CEO at AXIS. These components increase the frequency of the strongest storms and additional storm surge flooding due to sea-level rise.
In looking at some of the most at-risk areas — New York, Houston, and Miami, specifically — researchers sought to quantify future hurricane-generated storm surge losses for these areas, determined by rising sea levels.
The report’s findings support what many are already expecting, that increased event frequency combined with rising sea-levels will clearly and directly worsen future damage. Based on AIR’s hurricane model for the U.S., researchers found that the growth in the number of stronger storms, and landfalling storms overall, increased modeled losses by approximately 20%. For some areas, the number was slightly higher, particularly along the Gulf and Southeast coasts, where major landfalls already occur more frequently.
The loss increases extend to inland areas as well, the report adds, as stronger storms may hit farther from the coast. Using the analysis of storm surge for New York, Miami, and Houston to predict the impacts from sea level rise, modeled projections suggest that by 2050, storm surge losses may worsen by anywhere from “one-third to a factor of almost two, with larger impacts possible when combined with increases in the number of major storms.”
Actual losses in 2050 may be even higher than projected
While the analysis holds property exposure constant at today’s levels, coastal exposure is currently growing at a 4% annual rate and are likely to continue growing, the AIR report reads.
Dr. Peter Sousounis, vice president and director of climate change research at AIR Worldwide, says this analysis projects increased damage and losses from hurricanes without factoring in any changes to the concentration of property exposure along the coast.
“With more intense hurricanes making landfall, and storm surges from more strong storms on top of a higher sea level, the results presented in this study are only the first step,” Sousounis said in a statement. “Additional research into a wider range of impacts is necessary to complete what is surely a more complex picture, particularly related to how risk may change geographically.”
Critical factors include whether the strongest storms become not only more frequent but also more intense; whether storms could remain stronger at higher latitudes; how much additional rainfall hurricanes might produce, and whether storms are slowing down at landfall and maintaining their intensity longer after landfall.
Experts advise that accounting for the full range of impacts for coastal and inland areas is important to identify how populations will be affected and how public policy might adapt to address the likely widening insurance protection gap.
Find the full Quantifying the Impact from Climate Change on U.S. Hurricane Risk report online.