MY WORDS< well i may be mistaken but i think last year was suspose to be bad, and it turned out not so bad, but the higher water temp in the atlantic and tropics does kinda give the predictors a leg to stand on,this year plus El Niņo
Hurricane Season 2010: Property Owners and Insurers Brace for the Worst
By CARRIE COOLIDGE
Posted 9:00 AM 06/05/10 Economy, Insurance, BP, MetLife
http://www.dailyfinance.com/story/insurance/hurricane-season-2010-property-owners-and-insurers-brace-for-th/19500273/
The 2010 hurricane season officially started on June 1, and homeowners, businesses and insurers alike are bracing for what could be enormous losses. The reason for rising concern, apart from it being that time of year again: Weather Services International predicts that this season, which runs to Nov. 30, will be the most active since 2005's record-breaker.
That's when $62 billion in insured catastrophe loses occurred, including $41 billion related to Hurricane Katrina and $10 billion from Hurricane Wilma, according to the Insurance Information Institute. Last year's damages were relatively light, with total insured catastrophe losses totaling only $10.6 billion, largely because no hurricanes made a landfall.
The Department of Atmospheric Science at Colorado State University increased its seasonal forecast from the original one announced in early April. It's predicting 10 hurricanes (top winds of 74 mph or higher), with five being major storms (categories 3, 4 or 5 that have top winds of at least 111 mph). Experts are predicting 18 named storms, too. The figures are staggering because there were only 5.9 hurricanes per year on average from 1950 through 2000, with 2.3 per year being major.
Hot Water
The forecast increase reflects the influence of El Niņo conditions in the Pacific, in addition to the anomalously warm sea surface temperatures in both the tropical and North Atlantic, which are running at record high levels. Water temperatures are up by as much as four degrees Fahrenheit above average in some locations.
"This season could be one of the more active on record," says Jane Lubchenco of the U.S. Commerce Department's National Oceanic and Atmospheric Administration.
While exposure to windstorms and high property values combine to make Florida the state with the greatest potential for property losses, New York is second, according to risk modeling company AIR Worldwide. The value of residential and commercial coastal property in the state is estimated to be $2.4 trillion, according to AIR Worldwide. That figure is only slightly lower than that of Florida, which has approximately $2.5 trillion of commercial and residential coastal property.
Connecticut, Maine and Massachusetts are other East Coast states where insured coastal property exceeds 50% of total insured property values. Even a weak hurricane could easily produce $1 billion or more in damages if it makes landfall almost anywhere in the U.S., according to the Insurance Information Institute.
Not All Insurers Are Equal
"But despite dire predictions about the intensity of the 2010 hurricane season, in terms of the number of storms and the strength of storms, policyholders in every state who are exposed to hurricane risk should feel comfortable that private insurers have the resources to pay losses on whatever Mother Nature may have in store," says Robert J. Hartwig, president and economist at the Insurance Information Institute.
Private insurers, such as Allstate (ALL) and MetLife (MET), and reinsurers such as Swiss Re (SWCEY), have large reserves that enable them to pay claims quickly. The same might not be true for policyholders who hold state-issued insurance policies, however.
According to Hartwig, hundreds of thousands of property owners hold policies with state-run insurers, particularly in Florida. "Those insurers depend heavily on post-event debt financing and have to borrow to cover losses related to larger storms," he says. So, a spate of very large storms causing enormous losses could create funding gaps in some states.
Another potential problem: "If there is a deterioration or instability in the credit markets like there was in 2008, we would see the bonding capacity of state-run insurers plummet," says Hartwig. "This would mean the state-run insurer could potentially run out of money to pay claims and would be forced to devise other means, such as taxes, assessments or diversion of revenues from other budgets. It could be devastating if that were to happen."
Unknowable Effects in the Gulf
In 2010, any discussion of hurricanes now has to include the BP oil spill in the Gulf of Mexico. While it's already an environmental catastrophe, the oily water isn't likely to play any noticeable role in tropical cyclone intensity or frequency, according to Philip J. Klotzbach of Colorado State. But a hurricane or tropical storm could have an impact on the spill, depending on the storm's course.
"If the storm tracks to the west of the oil, there is the potential that the counter-clockwise circulation of the hurricane could drive some of the oil further toward the U.S. Gulf Coast," says Klotzbach. "Alternatively, a storm tracking to the east of the oil could push the oil further offshore. But little is understood about the interaction of tropical cyclones and oil."
Far more is understood, however, about the interaction of landfalling hurricanes and property damage. If the meteorologists' predictions for this season hold up, insurance claims will be rising with the winds.
Hurricane Season 2010: Property Owners and Insurers Brace for the Worst
By CARRIE COOLIDGE
Posted 9:00 AM 06/05/10 Economy, Insurance, BP, MetLife
http://www.dailyfinance.com/story/insurance/hurricane-season-2010-property-owners-and-insurers-brace-for-th/19500273/
The 2010 hurricane season officially started on June 1, and homeowners, businesses and insurers alike are bracing for what could be enormous losses. The reason for rising concern, apart from it being that time of year again: Weather Services International predicts that this season, which runs to Nov. 30, will be the most active since 2005's record-breaker.
That's when $62 billion in insured catastrophe loses occurred, including $41 billion related to Hurricane Katrina and $10 billion from Hurricane Wilma, according to the Insurance Information Institute. Last year's damages were relatively light, with total insured catastrophe losses totaling only $10.6 billion, largely because no hurricanes made a landfall.
The Department of Atmospheric Science at Colorado State University increased its seasonal forecast from the original one announced in early April. It's predicting 10 hurricanes (top winds of 74 mph or higher), with five being major storms (categories 3, 4 or 5 that have top winds of at least 111 mph). Experts are predicting 18 named storms, too. The figures are staggering because there were only 5.9 hurricanes per year on average from 1950 through 2000, with 2.3 per year being major.
Hot Water
The forecast increase reflects the influence of El Niņo conditions in the Pacific, in addition to the anomalously warm sea surface temperatures in both the tropical and North Atlantic, which are running at record high levels. Water temperatures are up by as much as four degrees Fahrenheit above average in some locations.
"This season could be one of the more active on record," says Jane Lubchenco of the U.S. Commerce Department's National Oceanic and Atmospheric Administration.
While exposure to windstorms and high property values combine to make Florida the state with the greatest potential for property losses, New York is second, according to risk modeling company AIR Worldwide. The value of residential and commercial coastal property in the state is estimated to be $2.4 trillion, according to AIR Worldwide. That figure is only slightly lower than that of Florida, which has approximately $2.5 trillion of commercial and residential coastal property.
Connecticut, Maine and Massachusetts are other East Coast states where insured coastal property exceeds 50% of total insured property values. Even a weak hurricane could easily produce $1 billion or more in damages if it makes landfall almost anywhere in the U.S., according to the Insurance Information Institute.
Not All Insurers Are Equal
"But despite dire predictions about the intensity of the 2010 hurricane season, in terms of the number of storms and the strength of storms, policyholders in every state who are exposed to hurricane risk should feel comfortable that private insurers have the resources to pay losses on whatever Mother Nature may have in store," says Robert J. Hartwig, president and economist at the Insurance Information Institute.
Private insurers, such as Allstate (ALL) and MetLife (MET), and reinsurers such as Swiss Re (SWCEY), have large reserves that enable them to pay claims quickly. The same might not be true for policyholders who hold state-issued insurance policies, however.
According to Hartwig, hundreds of thousands of property owners hold policies with state-run insurers, particularly in Florida. "Those insurers depend heavily on post-event debt financing and have to borrow to cover losses related to larger storms," he says. So, a spate of very large storms causing enormous losses could create funding gaps in some states.
Another potential problem: "If there is a deterioration or instability in the credit markets like there was in 2008, we would see the bonding capacity of state-run insurers plummet," says Hartwig. "This would mean the state-run insurer could potentially run out of money to pay claims and would be forced to devise other means, such as taxes, assessments or diversion of revenues from other budgets. It could be devastating if that were to happen."
Unknowable Effects in the Gulf
In 2010, any discussion of hurricanes now has to include the BP oil spill in the Gulf of Mexico. While it's already an environmental catastrophe, the oily water isn't likely to play any noticeable role in tropical cyclone intensity or frequency, according to Philip J. Klotzbach of Colorado State. But a hurricane or tropical storm could have an impact on the spill, depending on the storm's course.
"If the storm tracks to the west of the oil, there is the potential that the counter-clockwise circulation of the hurricane could drive some of the oil further toward the U.S. Gulf Coast," says Klotzbach. "Alternatively, a storm tracking to the east of the oil could push the oil further offshore. But little is understood about the interaction of tropical cyclones and oil."
Far more is understood, however, about the interaction of landfalling hurricanes and property damage. If the meteorologists' predictions for this season hold up, insurance claims will be rising with the winds.
