While a super-clean wind season is more likely than not to put pressure on rates in 2024 renewals, a hurricane making landfall will likely have profound implications for the industry, according to Berenberg analysts.
“However, and despite the stochastic element of the hurricane risk meaning outcomes could be binary, an “average” Q3 in terms of nat cat losses is more likely to continue to keep rates higher,” Berenberg stated.
As expectations rise following record-warm sea temperatures, a 60% chance of an above-normal hurricane season in 2023 has been forecasted by the US National Oceanic and Atmospheric Administration (NOAA).
The NOAA had initially forecasted a 30% chance of an above-normal Atlantic hurricane season, but in August, it raised it to 60%. The organisation also now forecasts a 25% chance of a near-normal season (40%) and only a 15% (30%) chance of a below- normal season.
The main driver for the change is the record-warm Atlantic sea surface temperatures, analysts explain, which are now expected to more than counterbalance the usually dampening impact on atmospheric conditions associated with the ongoing El Niño event.
Additionally, Tropical Storm Risk (TSR), a leading resource for predicting and mapping tropical storm activity worldwide, has also slightly raised its forecast for North Atlantic hurricane activity for 2023.
It estimates a 10% above the 1991-2020 30-year norm, with a forecast of two landfalling hurricanes during the season. Peak season runs from mid-August to end of October.