Tag Archives: Hurricanes

Hurricanes, the Gulf of Mexico and Energy Risks

If a strong hurricane were to pass through the Gulf of Mexico the overall effect on U.S. oil and natural gas supply would not be as severe as in past years, due to declining production in the region, according to a report from the U.S. Energy Information Administration (EIA).

However, Artemis blog warns that this won’t change the potential impact to insurers and reinsurers, particularly with the removal and decommissioning of rigs also being insured.

In its post, Artemis notes that the reinsurance and insurance-linked securities (ILS) market in recent years has been placing an increasing focus on gaining access to underwriting energy risks, particularly physical damage risks due to storms and earthquakes.

With an increasing amount of ILS capital at risk in the Gulf of Mexico, as well as on the shore through catastrophe bonds and collateralized reinsurance, the exposure to hurricane impacts on the oil and gas production network in and around the Gulf is growing.†

The EIA estimates that up to 11.6 million barrels of crude oil and 29.7 billion cubic feet of natural gas production could be disrupted by storms during the 2014 Atlantic hurricane season. Its estimate is based on NOAA’s Atlantic Hurricane Season Outlook released May 22.

NOAA expects that 8 to 13 named storms are likely to form within the Atlantic Basin over the next six months, including 3 to 6 hurricane, of which 1 to 2 will be intense.

In recent years offshore energy production has experienced relatively minor disruptions due to tropical weather, the EIA reports. However, a single strong storm can cause significant levels of shut-in production:

During September of 2008, category-4 hurricanes Gustav and Ike at one point caused nearly 100 percent of production capacity to be shut in. EIA estimates that these two storms (along with a tropical storm in July) resulted in the loss of 25 percent of the GOM crude oil and natural gas that would have been produced during the 2008 hurricane season.†

Check out the EIA chart showing recent impact of storms on GOM oil and natural gas production:

Check out I.I.I. facts and statistics on energy.

NOAA: Near-Normal Hurricane Season Expected

With just over a week to go until the start of the 2014 Atlantic hurricane season, NOAA’s outlook  is hot off the press and garnering a lot of attention.

Here’s NOAA’s take on the season by the numbers:

â–  NOAA is calling for a 50 percent chance of a below-normal season, a 40 percent chance of a near-normal season, and only a 10 percent chance of an above-normal season.

â–  NOAA predicts a 70 percent likelihood of 8 to 13 named storms (winds of 39 mph or higher), of which 3 to 6 could become hurricanes (winds of 74 mph or higher), including 1 to 2 major hurricanes (Category 3, 4 or 5; winds of 111 mph or higher).

â–  These numbers are near or below the seasonal averages of 12 named storms, six hurricanes and three major hurricanes, based on the average from 1981 to 2010.

What are the reasons behind NOAA’s predictions for a near-normal or below-normal season?

A key driver of this year’s outlook is the anticipated development of El Nià ±o this summer that is expected to cause stronger wind shear which reduces the number and intensity of tropical storms and hurricanes.

Cooler Atlantic Ocean temperatures this season also suggest fewer hurricanes, NOAA says.

Despite the prognosis for a below-normal or near-normal season, it’s important that coastal residents don’t underestimate the hurricane threat. As Dr. Kathryn Sullivan, NOAA administrator says:

Even though we expect El Nià ±o to suppress the number of storms this season, it’s important to remember it takes only one land falling storm to cause a disaster.†

Note: NOAA’s seasonal hurricane outlook is not a hurricane landfall forecast and does not predict how many storms will hit land or where a storm will strike.

For a round-up of the latest predictions from the major hurricane forecasters check out this post at Dr. Jeff Masters’ Wunderblog.

Check out I.I.I. facts and statistics on hurricanes here.

Latest Hurricane Forecasts Sound Warning for U.S. East Coast

Hurricane forecasters are sounding a warning bell for the U.S. East coast in their latest predictions for the 2014 hurricane season, even as overall tropical storm activity is predicted to be much-less than normal.

WeatherBell Analytics says the very warm water off of the Eastern Seaboard is a concern, along with the oncoming El Nià ±o conditions.

In its latest commentary forecaster Joe Bastardi and the WeatherBell team notes:

We think this is a challenging year, one that has a greater threat of higher intensity storms closer to the coast, and, where like 2012, warnings will frequently be issued with the first official NHC advisory.†

WeatherBell Analytics is calling for a total of 8 to 10 named storms, with 3-5 hurricanes and 1-2 major hurricanes.

According to WeatherBell, there have been plenty of El Nià ±o years with high impact seasons for the U.S. coast: 1957, 1965, 1969, 1976, 1983 (fading but still there), 1991, 1992, 2002, and 2004.

The forecasters say this pattern favors stronger storms (relative to normals) in-close to the U.S. rather than in the deep tropics which will have less to much-less than normal activity this year.

There is nothing to prohibit another Sandy-type hit from the southeast or three storms up the East Coast in one year despite a relatively low number of named storms in a season.†

Check out this post by Eric Holthaus over at Slate’s Future Tense blog for his take on how this year’s El Nià ±o could grow into a monster.

Meanwhile, London-based consortium Tropical Storm Risk (TSR) has lowered its forecast and predicts Atlantic hurricane activity in 2014 will be about 25 percent below the 1950-2013 long-term norm and about 40 percent below the recent 2004-2013 10-year norm.

In its updated forecast TSR is calling for 12 named storms, 5 hurricanes and 2 major (Category 3 and higher) hurricanes.

TSR says two key factors in its forecast for below-normal activity are: lighter trade winds over the Caribbean and North Atlantic coinciding with the likely development of a moderate El Nià ±o; and cooler than normal sea surface temperatures in the tropical North Atlantic.

TSR says both these predictors will have a moderately suppressing effect on activity.

A post over at Artemis blog  points out that while El Nià ±o typically results in a below average hurricane season in terms of the number of storms that form, that is no guarantee of a benign season in terms of catastrophic losses as that is down to the strength or severity and path of any storms that do form.

Updated forecasts will be released around June 1, when hurricane season opens.

Check out I.I.I. facts and statistics on hurricanes.

2013 Atlantic Hurricane Season Roundup

As the 2013 Atlantic hurricane season comes to a close, it may be easy to dismiss the significance of this year’s season.

While it’s true that this year had the fewest number of hurricanes since 1982, the 2013 hurricane season was only the third below-normal season in the last 19 years, since 1995, when the current high-activity era for Atlantic hurricanes began, according to forecasters.

A NOAA press release quotes Gerry Bell, lead seasonal hurricane forecaster at NOAA’s Climate Prediction Center, a division of the National Weather Service:

A combination of conditions acted to offset several climate patterns that historically have produced active hurricane seasons. As a result, we did not see the large numbers of hurricanes that typically accompany these climate patterns.†

A total of 13 named storms formed in the Atlantic basin this year, NOAA reports, but only two, Ingrid and Humberto, became hurricanes. Neither of these storms became a major hurricane (Category 3, winds of 111-129 mph and above).

Although the number of named storms was above the average of 12, the numbers of hurricanes and major hurricanes were well below their averages of six and three, respectively.

Meanwhile, the Insurance Information Institute (I.I.I.) and the Florida Insurance Council (FIC) remind us that while Florida has escaped hurricane damage for eight consecutive years, insurers are prepared for the state’s severe weather history to repeat itself.

Check out I.I.I. facts and statistics on hurricanes.

Update on Super Typhoon Haiyan

More than a week since devastating Typhoon Haiyan hit the Philippines and greater clarity is starting to emerge on the numbers surrounding this disaster.

A November 18 report from the United Nations Office for the Coordination of Humanitarian Affairs notes that Typhoon Haiyan affected an estimated 13 million people in nine regions.

The latest government figures estimate that over 4 million people have been displaced, of whom 392,470 are living in 1,587 evacuation centers in six regions, mainly in Western and Eastern Visayas regions.

The Wall Street Journal reports that Typhoon Haiyan caused at least 3,982 fatalities, injuring 18,266 people. An additional 1,602 people are missing.

An updated report from Guy Carpenter notes that according to Joint Typhoon Warning Center (JTWC) advisories, Typhoon Haiyan meets or surpasses the intensity of the strongest landfalling tropical cyclone in recorded history: Hurricane Camille (1969) which made landfall on the U.S. Gulf Coast as a devastating 190 mph (305 km/h) hurricane.

Catastrophe modeler AIR Worldwide reports that the islands of Leyte, Samar, and northern Cebu are among the worst affected areas. Tacloban City, the capital and biggest city (population of 220,000) of Leyte province was particularly hard hit as storm surges as high as 4 meters destroyed every coastal home and left many inland neighborhoods inundated with floodwaters.

As for the cost to insurers, AIR Worldwide estimates industry-wide insured losses of between $300 million and $700 million.

Due to low insurance take-up, this is a small proportion of the total damage to residential, commercial and agricultural property which AIR Worldwide estimates at between $6.5 billion and $14.5 billion.

AIR Worldwide explains:

The wide range in the modeled ground-up and insured losses reflects uncertainty in the meteorological parameters associated with this event. For the insured loss estimation, there is additional uncertainty in the take-up rates (insurance penetration) for the Philippines.†

Hurricane Sandy One Year On

Pictures are often more powerful than words and so it is as we mark the first anniversary of Hurricane Sandy.

This NASA image shows Hurricane Sandy approaching the U.S. East Coast at 1:35pm Eastern Daylight Time on October 29, 2012.


Remember that over a dozen states were impacted by Hurricane Sandy which caused $18.75 billion in insured property losses, excluding flood insurance claims covered by the National Flood Insurance Program (NFIP), according to estimates from ISO’s PCS unit as of January 18, 2013.

A report by Guy Carpenter titled Post Sandy: Damage Survey details observations and photos from Guy Carpenter’s 10-day on-site assessment of Sandy’s impacts for the most severely affected areas in Rhode Island, New York and New Jersey.

The photographs and findings document the scope and severity of damage and economic impact of Superstorm Sandy over affected regions across the Northeastern U.S., an area that produces approximately 10 percent of U.S. economic output.

And over at NOAA’s Ocean Service, you can compare aerial images of New Jersey captured shortly after Sandy passed over the Eastern Seaboard with new pictures of restored areas.

Mashable has also taken some of the most iconic photos from Hurricane Sandy and juxtaposed them with images of the same places today.

Meanwhile, the New York Times Lens blog tells of a photography exhibit and book showing the impact of the Hurricane Sandy on the city and its residents.

Hurricane Season: Out of Sight, But Not Out of Mind

While a number of U.S. websites and Twitter feeds are unavailable because of the government shutdown, it’s important to remember that the Atlantic hurricane season is still in progress.

Even more important when you consider that last year’s season looked like it was wrapping up when Hurricane Sandy, struck the East Coast October 28-31. Note: Sandy was the third costliest hurricane in U.S. history.

A tweet by FEMA administrator Craig Fugate late Wednesday directed us to the latest Atlantic Graphical Tropical Weather Outlook from the National Hurricane Center (NHC). See graphic below:


According to the NHC, showers and thunderstorms associated with an area of low pressure over the northwestern Caribbean Sea have become better organized and the system has a high chance – 70 percent – of becoming a tropical cyclone during the next 48 hours.

Over at Wunderblog, Dr. Jeff Masters says of the disturbance:

I give a 30% chance 97L will be Tropical Storm Karen with top winds of 40 – 60 mph at landfall between Louisiana and the Florida Panhandle on Saturday, a 5% chance it will be stronger, and a 65% chance it will be a tropical depression or mere tropical disturbance. Heavy rains of 3 – 6″ can be expected falling the coast from Louisiana to the Florida Panhandle on Saturday, even if 97L does not develop into a tropical depression.†

Meanwhile, the NHC  has  been  issuing advisories for Tropical Storm Jerry, though at this time it is nearly stationary over the central Atlantic and far from land.

Read up on hurricane facts and statistics over at the I.I.I.

KCC Report Underscores Hurricane Risk in Northeast

A recurrence of the 1938 Long Island Express hurricane today would result in estimated insured losses in excess of $35 billion, while a similar storm tracking further to the west would result in insured losses of more than $100 billion.

That’s a key takeaway  from a report by Karen Clark & Co (KCC) marking the 75th anniversary of the 1938 Great New England hurricane.

In a press release Karen Clark, president and CEO, KCC, says:

In the Northeast, it’s not a question of the intensity but of the storm track. It will only take a Category 3 hurricane with the right track to cause industry losses far exceeding anything we’ve seen to date. This type of storm could also result in losses well above many insurers’ PMLs.†

The KCC report notes that such a storm could make landfall anywhere along the Long Island, Rhode Island or Massachusetts coastlines and the different landfall points would result in dramatically different industry losses and damages.

This is because hurricanes are “right handed† in the northern hemisphere, with the strongest winds occurring from a few miles to 50 miles to the right of the storm center. Hurricanes that make landfall further to the west will cause greater damage because more of the right, or east, side of the storm will be over highly populated areas, according to the report.

Historical records show that the Northeast had felt the impact of several major hurricanes before 1900. Given this history, KCC says it’s reasonable to assume the 1938 storm is a 100 year type event for the region and has an estimated one percent annual probability of occurring.

However, while insurers have relied on probable maximum losses (PMLs) derived from catastrophe models to quantify and manage hurricane risk, KCC  points out  that the PML approach can give a false sense of security by masking exposure concentrations that can lead to solvency-impairing events.

Instead, KCC has developed the Characteristic Event (CE) methodology of “floating† the 100 year storms along the coast and estimating the resulting losses. While providing probability information, the CE method also clearly identifies exposure concentrations and “hot spots,† KCC notes.

Tools that rely on the historical record alone can significantly underestimate the chances of this type of an event and potential Northeast hurricane losses. Insurers shouldn’t assume, as the forecasters did in 1938, that a major storm will not follow a particular path simply because there is no record of such an occurrence.†

* In other hurricane-related industry news, the ACE Group has released six new audio podcasts providing commercial property and business owners with important information on how to best prepare for hurricanes. To access the podcast series, click here.

Humberto and Late Season Hurricanes

Tropical Storm Humberto, the eighth named storm of the 2013 Atlantic hurricane season, is generating a lot of news headlines, as the most recent forecasts  tip it to become  the first hurricane of the season by Wednesday.

The question on everyone’s minds is whether or not the record for the latest formation date of the Atlantic’s first hurricane will be broken. The bottom line: if Humberto reaches hurricane status before 8am EDT on Wednesday, the record will stand.

Gustav, which was upgraded from a tropical storm to a minimal hurricane on September 11, 2002, shortly after 8am EDT, currently holds the title as the latest-forming Atlantic season hurricane.

According to the Weather Channel, in addition to 2002’s Gustav there are two other hurricane seasons since 1960 in which the first hurricane did not form until after September 7: 2001 – September 8 (Erin) and 1984 – September 10 (Diana).

The Weather Channel also notes that August 10 is the average date the first Atlantic hurricane arrives, according to the National Hurricane Center, based on 1966-2009 averages.

Meanwhile, the Insurance Information Institute (I.I.I.) cautions us that late season storms can be very destructive:

Indeed, only last year, when it looked like the season was wrapping up, Hurricane Sandy struck the East Coast October 28-31, causing 72 deaths and $18.75 billion in insured property losses in 15 states and the District of Columbia, not including National Flood Insurance Program (NFIP) losses, according to the Property Claim Services (PCS) unit of ISO. Sandy was the third costliest hurricane in U.S. history, topped only by Hurricane Katrina in 2005 and Hurricane Andrew in 1992.†

And Sandy was not the latest hurricane to form during the Atlantic season, the I.I.I. notes. Hurricane Kate struck November 20-21, 1985 in the Florida Panhandle, causing $77.6 million in insured losses (about $165.6 million in 2012 dollars).

Check out I.I.I. facts and statistics on hurricanes.

Experts Say Above Average Hurricane Season Still Likely

While three of the major hurricane forecasters have reduced by a smidgen their predictions for the 2013 Atlantic hurricane season, the season as a whole is still expected to be above-average as is the chance of a major hurricane making U.S. landfall.

Bear in mind that to-date the 2013 season has seen four named storms (Andrea, Barry, Chantal and Dorian) – none of which reached hurricane status.

Here’s how the revised forecasts stack up:

Colorado State University’s (CSU) Tropical Meteorology Project now predicts 18 named tropical storms, including eight hurricanes and three major hurricanes (Category 3-4-5). This is down slightly from its June forecast which called for 18 named storms, including nine hurricanes and 4 major hurricanes. The CSU team also continues its call for above-average probability of a major hurricane making U.S. or Caribbean landfall.

London-based consortium Tropical Storm Risk (TSR) is calling for 14.8 named tropical storms, 6.9 hurricanes, of which three will be intense. This is down from its early June forecast which called for 15.6 named storms, 7.7 hurricanes including 3.5 major hurricanes.  TSR predicts North Atlantic and U.S. hurricane activity in 2013 will be about 20 percent above the long-term (1950-2012) norm.

WSI (Weather Services International Corp) has also reduced its forecast numbers slightly, to 16 named storms, eight hurricanes and three intense hurricanes, compared to its earlier forecast of 16/9/4. WSI noted that North Atlantic temperatures have not warmed as fast as expected this summer, and if current trends persist, it may have to reduce these numbers even further.

Artemis blog has a round-up of the numbers on its 2013 Atlantic Hurricane Season page.

Check out I.I.I. facts and stats on hurricanes.