2024 Hurricane Season in Review: A Manageable Year Despite Major Storms

We entered the 2024 hurricane season with a degree of trepidation as above average storm activity had been forecast.  The initial forecasts issued by Tropical Storm Risk in December 2023 suggested there would be four major hurricanes and by May 2024 this was increased to six major hurricanes. This was supported by a prediction by the National Ocean and Atmospheric Administration that higher sea temperatures, due to climate change, would contribute to a more active storm season and the potential for rapid intensification of storms.

The hurricane season officially began on 1st June and it had its slowest start since 2014 due to a large stationary heat dome over Central America and Mexico.

The first significant storm of the season was Hurricane Beryl in early July. Beryl was the earliest-forming Category 5 Atlantic hurricane and the strongest June/July hurricane on record. It moved through the Caribbean Sea causing damage in Grenada and just missing the Dominican Republic before making landfall in Quintana Roo as a Category 3 storm, weakening considerably as it moved through the Gulf of Mexico and into Texas. Insured losses are forecast at $3.6bn, according to Munich Re.

A few weeks later, Hurricane Debby, whilst only reaching Category 1strength, made landfall first in northwest Florida and then in South Carolina and is expected to have a similar financial impact to Beryl, with insured losses estimated at $3.4bn.

The Atlantic saw a lull in August and into September with only mild storm activity and forecasters wondering if the season would perhaps not live up to expectations. This changed when Hurricane Helene formed on 24^th September. Helene grew into a Category 4 storm as it approached Florida and made landfall near the sparsely populated Big Bend region. It then travelled far inland into North Carolina and Georgia; a path rarely seen before. The storm also caused catastrophic rainfall which triggered severe flood damage across the two states. Helene is reported to have been the deadliest hurricane to strike the US since Hurricane Maria in 2017. Helene’s insured losses are currently forecast as $16bn, including the state-backed National Flood Insurance Program (NFIP), but with such widespread damage this total continues to increase.

As Helene was making landfall in Florida, the remains of a tropical depression from the eastern Pacific interacted with low pressure in the western Caribbean which together formed a tropical depression in the Gulf of Mexico. The storm rapidly intensified and was named Hurricane Milton on 6^th October. It had the potential for significant damage as it built into a Category 5 storm and stayed at this intensity for several days. Damage was expected to be severe as it headed towards Tampa Bay. Significant storm surge was feared and this event had the potential to be the ‘big one’ with some forecasters suggesting that losses could exceed $100bn if the track and intensity remained as feared. In the event, it lessened to a Category 3 storm as it headed towards Florida and made landfall south of Tampa as a Category 1 storm avoiding Tampa Bay itself. Market commentators initially issued forecasts for Milton of up to $50bn of insured losses but these have gradually reduced to around $25bn, including NFIP.

The hurricane season officially ended on 30^th November following no further significant storm activity in the North Atlantic.

Total economic losses from hurricanes and typhoons in 2024 are projected to reach $133bn according to Munich Re. However, insured losses are expected to be significantly lower, with Munich Re estimating global insured losses at just $51bn, of which losses from Helene and Milton make up the lion’s share.

In addition to hurricanes, we have seen events in the Middle East and Europe which have added to insurance losses. Severe floods occurred in Dubai in April due to heavy rainfall, causing significant disruption over several days. Europe also faced substantial flooding in September from Storm Boris, followed by flash floods in Spain during October. Storms Bert and Darragh also caused significant damage in the UK  due to flooding of residential homes (Bert) and strong winds (Darragh). Swiss Re estimates global insured flood losses could reach $13bn, making 2024 the third costliest year for flood-related perils. Insured losses of approximately $10bn for the European floods alone make this the second costliest year for the region. Swiss Re attributes many of the events seen this year to a warming climate, as 2024 is on track to become the hottest year on record (1.54 degrees Celsius above the pre-industrial average).

Alpha comment

The total number of storms in 2024 was similar to forecasts, with insured losses remaining manageable as we saw just two large US hurricanes. The impact of these events on the Lloyd’s market is likely to be containable within syndicates’ catastrophe loads. At the recent Lloyd’s market message, Patrick Tiernan advised that Hurricanes Helene and Milton together are forecast to cost the market between $1.8bn and $3.4bn with an expectation that the loss will trend towards the lower end of the range. As 2023 saw little major US hurricane activity, we compare this with 2022, which saw Hurricane Ian cost the Lloyd’s market c$2.6bn and the year will still produce a good profit.

Rate reductions, which started to be seen in Q3, are now expected to be curbed by losses from the hurricane season. Increased uncertainty due to the impact of climate change remains a factor as increasing sea water temperatures is likely to contribute to rapid intensification in the future, as witnessed with Hurricane Milton. In addition, we have not yet seen significant amounts of new capital flowing into the market which leads to pressure on rates. However, recent broker reports suggest property cat renewals are seeing some rate reductions but from a high base. Therefore, overall, we expect rates to remain attractive at the January renewal season.

Tropical Storm Risk recently issued its initial forecast for 2025, predicting a more normal storm season, closer to the long-term average. Storm activity predictions should always be treated with caution, given their inherent uncertainty, especially at this early stage. We know that the number of events in any one year is less relevant than the path that the storms take, as this will directly influence the damage caused and the ultimate loss to the insurance industry.

We also note that events outside of the US hurricane season can affect the global insurance industry, as earthquakes have no seasonality and can cause significant devastation and cost. However, we enter the 2025 underwriting year with continued optimism.