Increase in insurance losses caused by North Atlantic hurricanes in a warmer climate
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...
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| Format: | Article |
| Language: | English |
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Nature Portfolio
2024-11-01
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| Series: | Communications Earth & Environment |
| Online Access: | https://doi.org/10.1038/s43247-024-01824-7 |
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| _version_ | 1850196144154476544 |
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| author | Francesco Comola Bernhard Märtl Hilary Paul Christian Bruns Klaus Sapelza |
| author_facet | Francesco Comola Bernhard Märtl Hilary Paul Christian Bruns Klaus Sapelza |
| author_sort | Francesco Comola |
| collection | DOAJ |
| description | 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. |
| format | Article |
| id | doaj-art-c73d7fe3083547ec8889e19dc0d7db78 |
| institution | OA Journals |
| issn | 2662-4435 |
| language | English |
| publishDate | 2024-11-01 |
| publisher | Nature Portfolio |
| record_format | Article |
| series | Communications Earth & Environment |
| spelling | doaj-art-c73d7fe3083547ec8889e19dc0d7db782025-08-20T02:13:32ZengNature PortfolioCommunications Earth & Environment2662-44352024-11-01511810.1038/s43247-024-01824-7Increase in insurance losses caused by North Atlantic hurricanes in a warmer climateFrancesco Comola0Bernhard Märtl1Hilary Paul2Christian Bruns3Klaus Sapelza4LGT ILS Partners LtdLGT ILS Partners LtdLGT ILS Partners LtdLGT ILS Partners LtdLumen Re LtdAbstract 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.https://doi.org/10.1038/s43247-024-01824-7 |
| spellingShingle | Francesco Comola Bernhard Märtl Hilary Paul Christian Bruns Klaus Sapelza Increase in insurance losses caused by North Atlantic hurricanes in a warmer climate Communications Earth & Environment |
| title | Increase in insurance losses caused by North Atlantic hurricanes in a warmer climate |
| title_full | Increase in insurance losses caused by North Atlantic hurricanes in a warmer climate |
| title_fullStr | Increase in insurance losses caused by North Atlantic hurricanes in a warmer climate |
| title_full_unstemmed | Increase in insurance losses caused by North Atlantic hurricanes in a warmer climate |
| title_short | Increase in insurance losses caused by North Atlantic hurricanes in a warmer climate |
| title_sort | increase in insurance losses caused by north atlantic hurricanes in a warmer climate |
| url | https://doi.org/10.1038/s43247-024-01824-7 |
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