Increase in insurance losses caused by North Atlantic hurricanes in a warmer climate

This is a Preprint and has not been peer reviewed. The published version of this Preprint is available: https://doi.org/10.1038/s43247-024-01824-7. This is version 4 of this Preprint.

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Authors

Francesco Comola , Bernhard Märtl, Hilary Paul, Christian Bruns, Klaus Sapelza

Abstract

North Atlantic hurricanes are a major driver of property losses in the United States and a critical peril for the reinsurance industry globally. We leverage insurance loss data and stochastic modeling to investigate the impacts of projected changes in hurricane climatology on the insurance industry, for +2 °C and +4 °C warming scenarios. We find that, relative to the historical baseline 1950-2022, expected changes in wind speed and rainfall may increase hurricane losses by 5% −15% (+2 °C) and 10% − 30% (+4 °C), with greater impacts at lower return periods than in the tail. The historical 100-year loss event may therefore be exceeded on average every 80 years (+2 °C) and 70 years (+4 °C). The expected changes in average annual loss are projected to be 10% (+2 °C) and 15% (+4 °C), with the largest relative increase attributable to precipitation-induced losses. Under the extreme SSP5-8.5 scenario, the expected loss inflation due to climate change is thus on the order of 0.5% per annum.

DOI

https://doi.org/10.31223/X5GQ4H

Subjects

Climate, Oceanography and Atmospheric Sciences and Meteorology

Keywords

hurricanes, Insurance, flood, global warming, Insured losses, North Atlantic

Dates

Published: 2024-02-07 23:41

Last Updated: 2024-11-04 13:17

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License

CC BY Attribution 4.0 International