Hurricane outlooks for 2020 call for significant even hyperactive season

The 2020 Atlantic hurricane season looks increasingly like it will be a season to watch for insurance, reinsurance and insurance-linked securities (ILS) interests, as the latest outlook forecasts to emerge raise the number of tropical storms and hurricanes expected during the season even further.

After our last update on prospects for the 2020 Atlantic hurricane season the average forecast, across those forecast teams we track who had issued an opinion by that time, was calling for 16 named tropical storms, 8 hurricanes and 4 major hurricanes to be experienced this year.

That’s already above the long-term, median and recent historical averages, only slight above the last decade though.

But now new forecasts have come out from the Weather Company and NC State University, with both calling for the 2020 hurricane season to see above average levels of activity, boosting our average even further.

First, the Weather Company, which is forecasting a significantly above average year with eighteen named storms, nine hurricanes and four major hurricanes for the 2020 Atlantic season.

In fact, basing its forecast outlook on Atlantic Ocean sea-surface temperatures, La Niña and other teleconnections, computer model forecast guidance, as well as past hurricane seasons exhibiting similar atmospheric conditions, chief meteorologist Dr. Todd Crawford warns this year could be particularly active.

“Weighing all of the factors, we have started the bidding at 18 named storms, nine hurricanes and four major hurricanes for the 2020 North Atlantic tropical season,” Crawford explained.

“However, we think there is still some upside to these numbers, and that a ‘hyperactive season’ like we had in 2010 and 2017 is still in play.”

Of course, there is no correlation between numbers of storms and landfalls, nor to insurance and reinsurance market loss experience.

But clearly, the more storms that form the greater the chances at least one finds it way towards land and could make a financial impact.

The state of El Niño or La Niña conditions will be a factor, with a chance of ENSO neutral through the start of the 2020 Atlantic hurricane season, but also a chance of it shifting to a La Niña by the second-half, around September onwards.

“La Niña generally acts as a speed boost to the Atlantic hurricane season, but it is just one factor that can lead to an active year,” the Weather Company explained.

Sea-surface temperatures across the Atlantic Ocean and Gulf of Mexico are also expected to be a factor in this year’s hurricane season and its chances of throwing up some landfalling storms it seems.

Taken as a whole, Atlantic Basin sea-surface temperatures are currently at record-warm levels, “supporting a big season,” Crawford explained.

Crawford also explained that computer forecast models for tropical forcing during peak hurricane season are “strongly suggestive of an active season,” with his own forecast sitting relatively alongside the model consensus.

NC State University researchers meanwhile forecast an active Atlantic hurricane season for 2020 as well.

They call for 18 to 22 named tropical storms to form, with eight to 11 perhaps becoming strong enough to be hurricanes and three to five storms becoming major hurricanes.

The researchers put out a warning for the Gulf of Mexico, highlighting that their forecast data suggests,”The Gulf of Mexico may see a significantly more active hurricane season.”

Here they point to a forecast calling for six to 10 named storms forming in the Gulf of Mexico, with two to five of them becoming hurricanes, and one to two becoming major hurricanes.

This is significantly above the averages for the Gulf and with above average sea surface temperatures the Gulf of Mexico may be a spot to watch particularly closely this season.

The use of the words significantly and hyperactive when describing the 2020 Atlantic hurricane season may fill some in the insurance, reinsurance, catastrophe bond and ILS fund community with trepidation. But it is important to remember that landfalling storms are the threat, not those that spin away out at sea.

However, it only takes one landfalling storm and it doesn’t even have to be the strongest of a season, to drive significant losses through the insurance, reinsurance and ILS markets.

Adding these forecasts to the six we track here on Artemis that have published 2020 updates so far gives us a new Artemis average forecast for the 2020 Atlantic hurricane season that calls for 17 named tropical storms, 9 hurricanes and 4 major hurricanes.

That’s up by one tropical storm and one hurricane on our last update.

Finally, one other forecast, the first to be issued from some researchers at Arizona University so not yet included in those we track, is also calling for a significantly above average level of hurricane activity in the 2020 season.

The Arizona researchers call for 19 named storms, 10 hurricanes and 5 major hurricanes during the season, with above average accumulated cyclone energy (ACE) of 163.

This is another call for a significant level of activity this 2020 Atlantic hurricane season.

The fact all of the forecasts seen to-date suggest an above average, to significantly above average, 2020 hurricane season does not necessarily mean the financial impacts will be above average, of course.

But given the currently challenging situation we find ourselves in, with remote working and social distancing set to be factors in any major claims events, the insurance, reinsurance and ILS market will be acutely aware of the additional burden a major catastrophe loss could bring and the potential inflationary effect the pandemic restrictions could cause.

Track the 2020 Atlantic tropical storm and hurricane season on our dedicated page and we’ll update you as new information emerges.