Colorado State University (CSU) has issued an update doubling down on its previously published forecast for an intensely active 2024 hurricane season, indicating that the probability of a U.S. major hurricane landfall is estimated to be well above its long-period average.
“Information obtained through early June indicates that the 2024 Atlantic hurricane season will have activity well above the 1991-2020 average. We estimate that 2024 will have 23 named storms (average is 14.4), 115 named storm days (average is 69.4), 11 hurricanes (average is 7.2), 45 hurricane days (average is 27.0), 5 major (Category 3-4-5) hurricanes (average is 3.2) and 13 major hurricane days (average is 7.4). We predict Atlantic basin Accumulated Cyclone Energy (ACE) and Net Tropical Cyclone activity in 2024 to be ~170% of their 1991-2020 average. We have maintained the same forecast numbers that we issued with our initial early April prediction.”
Furthermore, the CSU team predicts “an imminent transition in the tropical Pacific to neutral ENSO and then likely to La Niña conditions by the peak of the Atlantic hurricane season. La Niña typically increases Atlantic hurricane activity through decreases in vertical wind shear. This year’s sea surface temperatures across the tropical Atlantic and Caribbean are much warmer than normal, with temperatures averaged across the Main Development Region currently measuring ~1.4°C above the 1991-2020 average. This warmth favors an active Atlantic hurricane season via dynamic and thermodynamic conditions that are conducive for developing hurricanes.”
The CSU team’s “confidence this year is higher than normal for a June forecast based on the strength and persistence of the current hurricane-favorable large-scale environmental conditions. We present probabilities of exceedance for hurricanes and Accumulated Cyclone Energy to give interested readers a better idea of the uncertainty associated with these forecasts. The skill of CSU’s forecast updates increases as the peak of the Atlantic hurricane season approaches. Our early June forecast has good long-term skill when evaluated using hindcasts.”
CLM Expert Weighs In
“The severe weather hurricane prediction is a confirmation of what we will see more of in the future,” says David Dybdahl, CEO of ARMR Specialty Holdings. “I get amused by the weather folks comparing a recent weather-related observation to what the ‘normal’ average is for that date. We are way beyond normal historical averages. For example, the ‘normal’ temperature for June 3, or ‘normal’ rain fall for March, they are generally meaningless metrics going forward.
“Climate change, with its disastrous consequences for the earth as we know it, will be generally good for the insurance business. The economic efficiencies of the private insurance mechanism make the private insurance mechanism the ideal way to fund resiliency from natural weather events like floods, hurricanes, and wildfires. As long as the government stays out of the insurance business, capital market efficiency will automatically discourage high risk activities through higher insurance premiums.”
However, Dybdahl continues, “The opposite is true with the Federal Flood insurance program, for example. A few years ago, it was $30 Billion in the hole against an annual premium base of $3.5 billion. Most of the deficit in loss reserves was incurred in the past 10 years. What those numbers tell us is the true cost of flood of risk is being subsidized by general taxpayers, and the flood risk is increasing, with increasing severe weather events as a result of warmer water putting more moisture into the atmosphere.
“The climate is changing faster than insurance rating models are adapting to the changes. We see that in Florida property insurance rates and the cost of wildfire coverage in California. The insurance business model is very simple; it only has one raw material, cash. The insurance company needs to get more cash in the front door than is going out the back door in the form of paid claims and operating expenses. Insurance commissioners can get in the way of capital market efficiency when they rely on seven years of historical average claims to approve rates. The past seven years are the warmest years on record. Data for 30 years ago to compute an average is not very relevant,” Dybdahl opines.
“Today, the permafrost is melting. When permafrost melts, it adds carbon dioxide to the atmosphere. More carbon dioxide has a warming effect in the atmosphere. The melting sets off a chain reaction. More CO2 equals more melting, which equals more CO2, which equals more permafrost melting, which equals more glaciers and snowpack melting, which leads to higher sea levels, which leads to more warm water, ultimately leading to more sever hurricane damage. Once that chain of permafrost melting is set in motion, reducing emissions from cars, for example, will have no effect.”
When it comes to insurance specifically, according to Dybdahl, it “has the unique ability to incorporate the cost of risk into the price of goods and services in real time. With increasing severe weather events resulting from climate change, there are places that will not be fit for humans to live anymore. Unless the government programs subsidize high risk properties by insuring them with tax subsidized premiums, the insurance mechanism will automatically, and in real time, lead to the right decisions on where people should be living. More losses will drive demand for more insurance at higher premiums. We are headed for many decades of continuous growth for insurance products,” he concludes.