The 2014 Atlantic Hurricane Season officially drew to a close yesterday, ending another benign year where no major hurricane impacts were seen in the United States. 2015, however, may not be so quiet in the Atlantic according to Munich Re.
Global reinsurance firm Munich Re has published an update on the 2014 tropical cyclone and hurricane seasons as well as a brief outlook for the following year for the Atlantic hurricane season.
The 2014 Atlantic tropical storm and hurricane season has been one of the most benign on record. There were 8 named tropical storms in the Atlantic basin in 2014 and 6 of those actually reached hurricane status, which is a very high percentage, with 2 of them reaching major hurricane status.
That’s a very unusual statistic. For 75% of all tropical storms to become a hurricane might lead you to imagine that the season would have been damaging financially. But Munich Re estimates that the 2014 Atlantic tropical storm season resulted in economic losses of just $160m and insured losses of half that at just $80m.
Comparing the impact of this year’s storm season with the long-term averages for financial impact really drives home just how low losses have been.
According to Munich Re the total figure for insured losses from tropical storm events around the world in 2014 is estimated to reach $2.7 billion. That includes the Pacific where the bulk of those losses were located. The ten-year average for global insured losses from tropical storms is almost ten times higher at $24 billion, while the thirty-year average in $12 billion.
In an update, the U.S. NOAA discussed the season and the atmospheric conditions which led to it being so benign in the Atlantic in 2014.
“Fortunately, much of the U.S. coastline was spared this year with only one landfalling hurricane along the East Coast. Nevertheless, we know that’s not always going to be the case,” commented Louis Uccellini, Ph.D., director of NOAA’s National Weather Service.
“A combination of atmospheric conditions acted to suppress the Atlantic hurricane season, including very strong vertical wind shear, combined with increased atmospheric stability, stronger sinking motion and drier air across the tropical Atlantic,” explained Gerry Bell, Ph.D., lead hurricane forecaster at NOAA’s Climate Prediction Center. “Also, the West African monsoon was near to below average, making it more difficult for African easterly waves to develop.”
Munich Re’s Professor Peter Höppe, Head of the reinsurance firm’s Geo Risks Research unit, commented; “The patterns observed are well in line with what can be expected in an emerging El Niño phase. This warm phase of the Pacific ENSO cycle influences various kinds of weather extremes worldwide.”
However, Munich Re’s update notes that scientists are forecasting that the current weak El Niño phase will last until around mid-2015, after which the prospects for the Atlantic basin could be entirely different.
“If neutral ENSO conditions predominate again from mid-2015, there will no longer be any curtailing effect on hurricanes in the Atlantic,” Höppe explained.
So if the weak El Niño conditions to tail off before next year’s Atlantic tropical storm and hurricane season begins we could see more normal conditions, which would suggest a greater threat to the United States from hurricane landfalls and as a result a greater threat to insurance, reinsurance and exposed catastrophe bonds.
Höppe also comments on the prospects for an active tornado season, with ENSO conditions possibly setting 2015 up to be a much larger loss year.
“As El Niño conditions are still probable at the height of the tornado season in the USA (March to May), the likelihood of a more active tornado season in the USA is higher,” Höppe said.
So based on this outlook from Höppe, the United States could expect to see a more active tornado and severe thunderstorm season from March to May, followed by a more active Atlantic tropical storm and hurricane season, if indeed the ENSO pattern turns neutral for the middle of next year.
Both of those seasons pose a major threat to insurers, reinsurers and to insurance-linked security (ILS) investors in catastrophe bonds or collateralized reinsurance products, which could mean that 2015 would pose a much greater threat to the industry that the year we have just seen.
Details of the Atlantic tropical storms and hurricanes that formed in 2014 can be found via our dedicated page here. We will launch a new page for next year in time for the start of the 2015 season.