Europe to see increase in part-hurricane, part extratropical Sandy-like storms

by Artemis on April 9, 2013

A recently published study suggests that western Europe will be hit by an increasing number of hurricane like and hybrid storms, not unlike hurricane Sandy, as the global climate warms. The study titled ‘More hurricanes to hit Western Europe due to global warming‘ suggests that by the end of this century western Europe could see many more occurrences of tropical storms and hurricanes making their way north-eastward to impact the continent.

Hurricanes and tropical storms hitting Europe is not that uncommon in reality, however storms have generally weakened considerably by the time they travel far enough to the north and east to impact European countries. There have been a number of occasions in recent memory when storms have traversed the Atlantic and made landfall on European shores, Jeff Masters discusses this in connection with this study on his WunderBlog here.

This study looks at how a warming climate could affect weather models and patterns with a particular focus on the threat to Europe from tropical storms and hurricanes. The climate model studied predicts that the ‘breeding ground’ for Atlantic hurricanes will shift 700 miles to the east as the ocean warms this century. Thus, any storm forming further east can spend longer over warm, tropical Atlantic waters, enabling it to generate more power and become more defined, as stronger hurricanes generally do.

This means that as storms turn to the north and east, which many do during every Atlantic hurricane season, more of them will have generated sufficient power to make the long journey northwards without losing as much intensity. Europe is regularly affected by the remnants of Atlantic hurricanes each year, but if this prediction comes true then more of those remnants may still be fully formed extratropical storms threatening damage and of course insured losses.

The model shows that wind shear is not predicted to change much over this century in the region meaning that the researchers forecast that many more storms with hurricane force winds will reach Europe as we move through this century. Most will be extratropical in nature, but as Jeff Masters rightly points out hurricane Sandy has shown just how devastating an extratropical storm can be.

The model shows that the number of hurricane-strength storms to impact Europe between August and October could rise from 2 per year to as high as 13 over the century and that by the end of the century all hurricane strength storms in Europe will have originated in the tropics. The paper concludes that “tropical cyclones will increase the probability of present-day extreme events over the North Sea and the Gulf of Biscay with a factor of 5 and 25 respectively, with far reaching consequences especially for coastal safety.

Clearly this would have a very big impact on the insurance and reinsurance industry, who currently protect themselves against European windstorms which tend to be winter storms. The generally accepted season for European windstorms is from December through to the end of March, roughly, and the reinsurance industry are prepared with a reasonable amount of cover in force each year.

European windstorms are through to cause on average around €2 billion of economic losses each year and around €1.5 billion of insured losses, making them the second highest cause of global natural catastrophe losses after U.S. hurricanes. According to Perils AG windstorm Kyrill in 1997 had an insurance industry loss of around €3.6 billion. The year 1990, which saw eight storms in a short period of time cross Europe in the winter is thought to have caused around €13 billion of damages.

European windstorms are a serious enough threat to insurers and reinsurers that catastrophe bonds, industry loss warranties (ILWs) and other collateralized reinsurance solutions are regularly used to transfer the risk of these storms to the capital markets as well. But how would the insurance and reinsurance market react if the number of summer extratropical storms began to outweigh the winter storms?

If the studies forecast comes true we could see a time by the end of this century where insurers and reinsurers are more concerned about hurricane type and hybrid storms impacting Europe than they are about the European windstorms we’re all familiar with now. Europe could, if the worst case of 13 storms per year came true, become equally at risk of insured losses due to hurricanes as the U.S. is today. That would create a need for significant risk capital to be made available and we’d likely see a big increase in the use of catastrophe bonds to hedge the risks.

The year 2100 is a long way off, but with many climate scientists seeing ocean temperature increases happening right now the risk of these part-hurricane, part extratropical Sandy-like storms is growing all the time and the threat to Europe and insurers and reinsurers with it.

It’s also worth being reminded of a 2007 study which suggested that by the end of this century we could see hurricanes being spawned in the Mediterannean.

Remember that you can keep track of the 2013 Atlantic hurricane season with Artemis here.

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