Recent reports about warming oceans and horrific hurricanes may have risk execs considering a move inland, and carriers adding more policy exclusions

Hurricanes: a hot topic getting hotter: recent reports about warming oceans and horrific hurricanes may have risk execs considering a move inland, and carriers adding more policy exclusions

Matthew Brodsky

Insurers and insurance buyers have read the weather page a lot this past summer. They should have also been reading Nature. In the July 31 online edition of that journal, Kerry Emanuel, professor of atmospheric science at MIT, published a study showing that the power dissipated by hurricanes has more than doubled in the last 30 years in the North Atlantic and North Pacific.

Emanuel used power dissipation, or PDI, of a storm because it’s a good measurement of how threatening a storm is. The higher its PDI, the longer a storm lasts, the higher its wind speeds, and the more dangerous and destructive it can be.

He then connected this increased PDI to global warming. Global warming has led to increased ocean surface temperatures during the same 30-year period that hurricane PDI has doubled, his argument went, so it makes sense that these warmer waters, and the global warming behind then, are fueling the stronger storms.

Days after the study was released, the major hurricane forecasting outfits issued updates. The National Hurricane Center, Dr. Gray’s Tropical Meteorology Project at Colorado State University, and England’s Tropical Storm Risk all upped their storm estimates for 2005. At the top end, predictions called for as many as 11 hurricanes, 22 named storms in total, a handful more than forecasted in May.

These higher numbers, in part, reflect the freakishly active early part of the 2005 season. They’re also a bad omen for the property/casualty industry. For Emanuel, the signs portend global warming on a catastrophic scale.

“The folks who study tropical surface temperatures,” Emanuel explains, “point out that this upswing in sea surface temperatures is very much unprecedented, not just in the last 30 years, but in the last 1,000 years. And that’s why we are worried that this upswing in hurricane activity … is a global warming signal.”

Emanuel’s research, however, has its critics–one of the most notable being the Tropical Meteorology Project. Gray, the godfather of the hurricane-prediction business, and his team contend that natural short-term climatic cycles are at play, not man-made factors.

“If global warming of the oceans were responsible for increases in tropical cyclone activity,” says Philip Klotzbach, a research associate on the team, “one would expect hurricane activity to increase in all tropical cyclone basins. However, this has not occurred.”

Emanuel concedes that hurricane activity is decreasing in certain locations, but he argues it is no indication of a global trend. Global warming does not increase temperature at every coordinate on the globe, he counters, and neither does it stir up hurricanes in every ocean.

“What we tend to look at is the sum over all the ocean basins,” he says, “just as when we look for signals in temperatures, we look at an average–over the whole surface of the earth.” Experts do agree that the Atlantic basin is getting warmer, and that means more, possibly stronger, hurricanes there for many seasons to come.

If the likes of recent Hurricane Katrina, which made landfall on Aug. 29, are any indication, insurers and risk execs could stop reading the weather page to allay their fears. Or they could utilize weather models to help mitigate storm risk.

According to Dan Victor, chief meteorologist with the Unisys Weather Solutions group, companies can benefit from short- and medium-term models, which can provide concrete information from three to five days to 10 to 20 days out from a major storm.

For long-term solutions, says Peter Fontaine, co-chairman of the Energy, Environmental & Public Utility Practice Group at the Cozen O’Connor law firm, companies ought to tackle global warming by embracing technologies and strategies that reduce carbon emissions.

“The insurance industry and those in the business of insuring risk … have a real vested interest in making this happen,” he says, “because they stand to lose significant amounts of money in losses caused by global climate change, and storm intensity is just one impact from a warmer world.”

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