RMS calls for more U.S. landfall hurricanes over next five years

Despite the “docile” hurricane season in 2006, increased hurricane activity and landfall is likely to continue in 2007 and beyond, according to catastrophe modeler Risk Management Solutions (RMS).RMS is reaffirming its five-year outlook of increased storm risk after presenting a range of statistical models to a panel of seven leading hurricane scientists for review, A.M. Best has reported.”This expert panel concluded that the forthcoming five-year period of hurricane landfall frequency would be very similar to our original five-year projection established last year,” RMS director of model management Joshua Darr said in a statement. RMS’ five-year projection forecasts 40%-higher modeled annualized insurance losses, on average, across the Gulf Coast, Florida and the Southeast. It also projects higher losses by 25% to 30% in the Mid-Atlantic and Northeast coastal regions.”These projections, along with other cat modelers increasing the probable maximum losses in their models, are among the driving forces for the increased hunger for reinsurance coverage, as were the rating agencies’ increasing capital-adequacy requirements,” A.M. Best reports. “This has led to a lack of availability in reinsurance, compounded by a market already beset with rising prices and shrinking availability from the 2004 and 2005 storm seasons.”A key driver of the current view of a rising landfall hurricane risk is an increase of more than 30% in the modeled frequency of major hurricanes making U.S. landfall, according to RMS. “This is due to increased activity seen in the Atlantic since 1995, driven by warmer sea temperatures and changes in the atmospheric circulation,” A.M Best says.According to Darr, the “increase in activity of the most severe Category 3-5 hurricanes will be higher than the increase in Category 1-2 storms, based on the high likelihood of warmer-than-normal sea surface temperatures.”A study from the Georgia Institute of Technology found that an increase in sea surface temperatures is linked to a “near doubling” in the number of Category 4 or 5 hurricanes in the past 35 years.