Hurricane season forecasts continue to suggest more risk in 2017

The latest forecast to be released for the 2017 Atlantic Tropical Storm & Hurricane Season joins others in suggesting a more active season, with a greater number of hurricanes likely to form over the coming months, as Colorado State University forecasters also increase their predictions for landfalling storms on the U.S. coastline.

All of the hurricane forecasters we track have released increased predictions for the number of named tropical storms, hurricanes and major hurricanes they expect during the 2017 season.

Clearly the changing forecasts, as expectations for an El Nino wane and the increased sea surface temperatures are factored in, will alert the reinsurance and insurance-linked securities (ILS) market to the possibility of higher activity this year.

Colorado’s forecasters led by Phil Klotzbach have upped their forecast from 11 named tropical storms, 4 hurricanes and 2 major hurricanes of category 3 strength of greater, to 14 named storms, 6 hurricanes and 2 major storms.

That takes our Artemis average forecast of 2017 Atlantic tropical storm and hurricane activity up to 12.7 named storms, 6 hurricanes and 2.6 major hurricanes, across the forecasters we follow.

You can see all of the forecasts we track below, as well as the long-range and near-term seasonal averages.

But of greater concern perhaps than the increasing number of hurricanes forecast, as storm formations do not necessarily equal losses to reinsurance interests, should be the increasing landfall probabilities forecast by the Colorado team.

Again, landfalls do not necessarily equal massive reinsurance and ILS market losses, but clearly any storm that does in 2017 will be a threat to these markets and investors in instruments such as catastrophe bonds.

The Colorado forecasters now give a 55% chance for at least one hurricane to make landfall on the U.S. coast, slightly above average and up from the 42% chance it gave in April.

For Florida and the East Coast the probability of a landfall is seen as 33%, above average and up from 24%. While for the Gulf Coast it is 32%, again above the average and up from the previous forecasts 24%.

The forecasters comment on the tropical weather outlook; “The odds of a significant El Niño in 2017 have diminished somewhat, and portions of the tropical Atlantic have anomalously warmed over the past two months. While the tropical Atlantic is warmer than normal, the far North Atlantic remains colder than normal, potentially indicative of a negative phase of the Atlantic Multi-Decadal Oscillation (AMO). Negative phases of the AMO tend to be associated with overall less conducive conditions for Atlantic hurricane activity due to higher tropical Atlantic surface pressures, drier middle levels of the atmosphere and increased levels of sinking motion.”

There’s no way of knowing at this stage how the 2017 hurricane season will pan out, but the increased forecasts for activity and the increasing probabilities of a hurricane making landfall in the U.S., should both serve as reminders of the risk that lies ahead for the reinsurance and ILS markets.

We’ll update you as the 2017 Atlantic hurricane season develops and our dedicated page on the 2017 hurricane season will be updated as new forecasts emerge and as storms form throughout the year.

Join Artemis in Singapore on July 13th 2017 for ILS Asia