NU Online News Service, June 1, 12:15 p.m. EDT
The Gulf Coast remains the most likely hot spot for hurricane landfall, according to an updated report from Guy Carpenter that issued a forecast just slightly off from the landfall average dating back to 1951.
On the first day of the official Atlantic basin hurricane season, the reinsurance broker, a subsidiary of New York-based Marsh & McLennan Companies, issued its updated GC ForeCat that was unchanged from its April forecast.
The Gulf Coast region, from the Alabama-Florida border to Texas, remains the most vulnerable with a landfall rate of 0.65, which represents the mean number of landfall tropical cyclones for the region. The average landfall rate for 1951-2007 is 0.66.
The entire Florida coastline's landfall rate is almost half of the 56-year average. The April/May forecast stands at 0.29, while the 1951-2007 rate is 0.49.
Both the southeast and northeast coastline averages are lower than the long-term average.
The southeast coastline (from Atlantic Florida-Georgia border to Cape Hatteras, N.C.) rate for this season came in at 0.36 compared to the 1951-2007 average of 0.41.
For the northeast coastline (from Cape Hatteras to Maine) the rate was the lowest at 0.21, just slightly off of the 1951-2007 average landfall rate of 0.29.
Guy Carpenter said it developed its product in collaboration with WSI Corp., a provider of weather-driven business solutions.
In its May forecast, the National Oceanic and Atmospheric Administration issued a near-normal forecast for this year's hurricane season with nine to 14 named storms, four to seven hurricanes, and one to three major hurricanes.
Guy Carpenter also issued a report on Florida property-catastrophe reinsurance rates, which experienced a 15 percent increase as of the June 1 renewal dates.
The rate was lower than the anticipated 20 percent increase anticipated by forecasters, the broker said in a statement, and a turnaround from last year's 15 percent decrease.
The broker said the rate is consistent with the overall trend for the year, which saw 10-to-14 percent increases for U.S. national reinsurers at the April 1 renewal.
Despite the economic crisis, demand did not outstrip supply, which contributed to the restrained increase.
In a statement, Lara Mower, property specialty leader for Guy Carpenter, said, "Given the unique characteristics of the Florida market, a 15 percent rate increase suggests that capacity conditions have not appreciably worsened through 2009 and that the market has, in fact, stabilized to a certain degree."
Ms. Mower added, "The Florida market is always watched closely, and we would expect the current trend-manageable rate increases driven by limited but available capacity-to extend through the July 1, 2009 renewal barring a mega-catastrophe, a new round of turbulence in the capital markets, or other extraordinary circumstances."
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