Hurricane Otto, the fifteenth named storm and seventh hurricane of the 2016 Atlantic storm season, formed in the Caribbean this week and has intensified into a category 1 storm with sustained winds of 75 mph as it heads for a landfall near the Nicaragua and Costa Rica border.
Hurricane Otto becomes the latest hurricane in the calendar year since Epsilon in 2005 and the latest ever to form in the Caribbean. Meteorologists say Otto is late even for the western Caribbean.
Hurricane Otto currently has sustained winds of 75 mph with some higher gusts and a minimum central pressure of 988mb. Otto is a relatively small hurricane right now, with hurricane forces winds only spreading 10 miles from the center and tropical storm force winds 60 miles.
Hurricane Otto is forecast to strengthen somewhat before it makes landfall on Thursday somewhere close to the border between Nicaragua and Costa Rica. Otto could reach category 2 hurricane strength before landfall with sustained winds of 90 mph or higher, according to some forecasters.
When hurricane Otto makes landfall rainfall is likely to be the main threat, with as much as 18 inches of localised rainfall for Nicaragua and Costa Rica anticipated which could result in landslides.
Hurricane Otto will move across land relatively quickly and emerge into the Pacific, after which it is expected to dissipate gradually.
As ever, given hurricane Otto’s track towards central American countries, the exposure for the reinsurance industry is relatively small and collateralised sources of reinsurance capital have not expanded into this region in any meaningful way yet.
However the threat to life and potential for impacts to local insurers should not be understated, but Otto’s track across a narrow swathe of Central America will minimise impact to local insurance firms and mean reinsurance exposure is very low.
Hurricane Otto’s formation so late in the season takes the number of named tropical storms in the 2016 season to 15 and hurricanes to 7, with 3 of those reaching major hurricane status. That’s just one storm higher than the average across the forecasters we track here at Artemis.