Colorado State University hurricane forecasters Klotzbach & Gray have published a discussion of the outlook for Atlantic basin hurricane activity during the 2012 season which is fast approaching. In a statement which the re/insurance industry will be encouraged by they forecast that the 2012 Atlantic basin hurricane season will see below average activity compared with the 1981-2010 climatological average.
The reason for the reduced activity is due to the fact that the tropical Atlantic has anomalously cooled in recent months and they see a relatively high chance of an El Niño event this year. The paper says:
Anomalously strong westerly winds across the North Atlantic (associated with a predominately positive phase of the North Atlantic Oscillation (NAO)) have caused significant cooling of the tropical Atlantic. Currently-observed changes in sub-surface temperature and sea surface temperature (SST) patterns in the tropical Pacific, as well as predictions from both dynamical and statistical models, indicate that there is a relatively high chance that El Niño will develop this summer and fall. Both of these conditions lead us to believe that the 2012 Atlantic hurricane season will likely have less activity than the average 1981-2010 season.
We’ve written before about the impact of the El Niño/Southern Oscillation (ENSO) and La Niña on the amount of hurricane activity experienced during a season. As the La Niña weakens, and it appears it is weakening more quickly than before and may now transition into El Niño conditions, it looks like hurricane activity will be more subdued in 2012.
The paper from Klotzbach & Gray does note that there is still a chance for the season to be more severe and it is still too early to firmly predict the number of hurricanes and landfalling events that we can expect. However they say the most likely outcome is for a below average season.
Of course a below average hurricane season and an El Niño year does not necessarily translate into lower insured losses. As we’ve seen in the last two years, insured losses have been low from hurricanes and there haven’t been so many landfalling storms, despite the total activity of the season being very high. Sometimes a below average season seems to correlate with more landfalling hurricanes, particularly in Florida. So for re/insurers and investors in catastrophe bonds, while these outlooks are useful, there is no room for complacency when it comes to the Atlantic hurricane season.
We’ll update you as the next round of hurricane season forecasts become available in April.