Study assesses the likely impact of climate change on hurricane severity and storm surge over the next 30 years
Catastrophe modeling firm AIR Worldwide (AIR), in collaboration with experts from the Brookings Institution and AXIS Capital Holdings Limited, has released a report which explores how climate change may affect hurricane risk in the United States by 2050, specifically related to financial losses to residential and commercial properties.
“Climate-related risks are among the most serious issues facing the world today and insurers have a critical role to play in mitigating them,” said Albert Benchimol, president & CEO at AXIS. “While climate change is likely to affect hurricanes in multiple ways, the report highlights two important aspects: an increase in the frequency of the strongest storms, and additional storm surge flooding due to sea level rise.”
The analysis relies on the AIR Hurricane Model for the US, which considers wind, storm surge, and precipitation-induced flooding, and AIR’s database of property exposure.
The report explores future hurricane-generated storm surge losses for selected study areas around New York, Houston, and Miami, as indicators of the additional risk created by rising sea levels.
The results of the analysis show that increased event frequency and sea level rise will have a meaningful impact on future damage.
The growth in the number of stronger storms, and landfalling storms overall, increases modeled losses by approximately 20%, with slightly larger changes in areas such as the Gulf and Southeast coasts where major landfalls are already more likely today.
The loss increases extend to inland areas as well, as stronger storms may penetrate farther from the coast.
The impacts from sea level rise, using the analysis of storm surge for New York, Miami, and Houston suggests that by 2050, sea level rise may increase storm surge losses by anywhere from one-third to a factor of almost two, with larger impacts possible when combined with increases in the number of major storms.
The actual losses in 2050 could be higher; while the analysis holds property exposure constant at today’s levels, coastal exposure is currently growing at a 4% annual rate and are likely to continue growing.
“This analysis points to increased damage and losses from hurricanes without factoring in any changes to the concentration of property exposure along the coast,” said Dr. Peter Sousounis, vice president and director of climate change research, AIR Worldwide. “With more intense hurricanes making landfall, and storm surges from more strong storms on top of a higher sea level.”
Critical factors include whether the strongest storms become not only more frequent, but also more intense; whether storms could remain stronger at higher latitudes; how much additional rainfall hurricanes might produce, and whether storms are slowing down at landfall and maintaining their intensity longer after landfall.
Accounting for the full range of impacts for coastal and inland areas is important to identify how populations will be affected and how public policy might adapt to address what is likely to be a widening insurance protection gap.