Insights
TSR & Colorado State University (CSU) forecast below normal hurricane activity
Posted 14/04/2023 – Quick takes
Tropical Storm Risk (TSR), a leading resource for predicting and mapping tropical storm activity worldwide, has forecast the activity levels for the 2023 North Atlantic Hurricane Season to be 25-30% below the 30-year average. Tropical North Atlantic and Caribbean Sea waters are expected to be close to average during August-September 2023 but weak El Niño conditions are expected to develop through August-September 2023 and into the autumn thereby contributing to enhanced trade winds over the tropical North Atlantic and Caribbean Sea and enhanced vertical wind shear. The combined effect of these environmental factors are expected to suppress North Atlantic hurricane activity in 2023.
TSR forecasts 6 hurricanes in 2023, of which 2 are forecast to be intense. Last year, for 2022, the equivalent forecast was for 9 hurricanes, of which 4 would be major hurricanes. In the event, there were only 2 major hurricanes in 2022, Hurricane Fiona and Hurricane Ian. Hurricane Ian was by far the costliest event, resulting in estimated insured losses of up to $65 billion (according to Swiss Re). After Hurricane Katrina in 2005, Ian ranks as the second-costliest natural catastrophe insured loss event on record.
Colorado State University (CSU) has also forecast a ‘slightly below-average’ 2023 Atlantic basin hurricane season due to the El Niño conditions but reports considerable uncertainty as to how strong an El Niño would be, if it does develop. Sea surface temperatures in the eastern and central Atlantic are much warmer than normal, so if a robust El Niño does not develop, the potential still exists for a busy Atlantic hurricane season. It therefore believes that larger-than-normal uncertainty exists with this outlook. CSU anticipates a near-average probability for major hurricanes making landfall along the continental United States coastline and in the Caribbean. CSU agrees with the TSR forecast of 6 hurricanes for 2023, of which 2 are expected to be major hurricanes.
Alpha comment
Having seen several years of ‘above-average’ forecast hurricane activity, 2022 actually saw fewer major hurricanes than average but included the second-costliest natural catastrophe insured loss on record. This proves that the number of storms forecast ,or indeed formed in the Atlantic is far less relevant than the size of any given storm, where it makes landfall and its track across the US. We are hopeful that, after six years being heavily impacted by large hurricanes losses, a more ‘normal’ number and size of storms may appear in 2023. With reinsurance rates increasing significantly this year, on top of increases paid in previous years, we definitely have more premium with which to pay for losses, if and where they appear this year.
