GE Insurance Solutions have just issued this press release following a symposium of experts in London:
Is it the Warming ... or Too Soon to Tell?
Experts Present Evidence on Hurricanes at GE Insurance Solutions Event
London – 7 November 2005 – The damage that hurricanes inflict will continue to rise – along with their frequency and severity, according to
speakers at a recent Hurricane Symposium in London held by The Insurance Leadership Institute of GE Insurance Solutions.
The size of US hurricane losses will continue “to stagger and astound us” as a result of population growth and wealth accumulation in
hurricane-prone coastal regions, according to Roger Pielke, Jr., Ph.D, Director, Center for Science and Technology Policy Research, University of
Other speakers at the symposium included Kerry A. Emanuel, Ph.D., a Professor of Earth, Atmospheric and Planetary Science at Massachusetts Institute
of Technology; Joseph Chamie, Ph.D., Director of Research at the Center for Migration Studies; and Ken Slack, Senior Underwriter, Global Property, GE
“As large as [Hurricane] Katrina was, it wasn’t unprecedented,” Pielke said, indicating that storms of such magnitude have occurred in the past,
but they inflicted less damage because the coastal regions were not as densely populated as they are today.
For example, he said the unnamed hurricane that hit downtown Miami in 1926 would have cost approximately $100 billion in economic damage – if it had
happened in 2004.
Further, due to changes in population and wealth, Pielke said, Hurricane Andrew would cost twice what it actually cost in 1992 – if it were to
reoccur today. (The Insurance Information Institute says that Hurricane Andrew cost the insurance industry USD 21.5 billion in 2004 dollars. Pielke
notes that total economic damages are generally calculated by multiplying the insured figure by two).
Ken Slack, Senior Underwriter, Global Property, GE Insurance Solutions, said the 2004-2005 hurricane seasons have reminded the insurance industry of
the high frequency and severity potential of hurricanes. “We’ve had three of the top five storms in the last few months.”
He emphasized that at least three of the four hurricanes to hit the Florida coastline in 2004- Charley, Frances and Ivan – threatened far greater
devastation if they had not veered at the last moment and hit less populated areas. Further, he continued, if Hurricane Rita would have equaled
Hurricane Katrina in damages, the pressure on the insurance industry would have been immense.
“Katrina is the most expensive natural disaster ever,” Slack affirmed, citing one estimate that puts industry-wide insured damages at $40 billion.
“For the purposes of discussion, an excess of that is very possible.
When Hurricane Rita, a storm of equal intensity, targeted the Galveston area less than a month later, Slack said, “the industry held its breath. I
Although the insurance industry relies heavily on catastrophe models to set its catastrophe premiums, Slack reminded the audience that models have
their limits. For example, he said that each storm has its unique characteristics, which is not something that a model can account for.
“Frances and Ivan [in 2004] had about 100 tornadoes, which caused random damage that was quite catastrophic in nature,” he said. He noted that
models also don’t take into account collateral damage. “A house can be damaged by a 2x4 flying through the window and if the wind gets in, the
He emphasized that he was not “belittling the use of the models in our business by any stretch. They’ve been a tremendous educational tool and a
discipline we all embrace. But remember, they have limitations.”
Despite the risk to coastal regions, Joseph Chamie, Ph.D., who is a demographer, indicated there’s no end in sight to further population growth.
In 2003 about 53% of the United States, or about 153 million people lived in 673 coastal counties, Chamie said, noting that coastal populations have
grown about 150% since 1960. Further, by 2008, he indicated, the total coastal population is expected to increase by approximately 7 million.
“In addition to permanent residents, there is a large swell of vacationers – holiday and weekend – coming in the winter months,” he said,
noting that some counties increase from 10 to 100 fold in the winter season and one-quarter of the nation’s seasonal homes are found in the coastal
areas of Florida.
He went on to say that 23 of the 25 most densely populated US counties were coastal in 2003. “A large portion of the coastal areas with high
population rates are subject to inundation from hurricane storm surges,” he affirmed.
Along with the population comes the property development.
Chamie noted that from 1988 to 1993, “the value of insured property in Florida went from $565.8 billion to around $872 billion, and at the current
rate of growth, this soon will pass $1 trillion.”
Several of the speakers at the symposium confirmed that scientists agree that for the foreseeable future, there will be active hurricane years for
whatever reason, whether its global warming or natural cycles.
During his presentation at the symposium, Professor Emanuel discussed his studies of storm intensity, which he said are indicators that global warming
may be affecting hurricane activity. He said that studies show that storm intensity has increased in parallel with increasing ocean temperatures.
Emanuel said that climatologists often rely on classical measures of tropical cyclone activity, such as the frequency of events and frequency of
intense hurricanes, which may be too simplistic for a real gauge of climate change.
He explained that much of the data collected on hurricane activity during the 20th century was based more on guesswork than actual measurement –
before the satellites helped with tracking beginning in the 1970s. It’s therefore difficult to make any long-term assumptions about trending,
Although this global increase in hurricane activity is very interesting, near-term assumptions about global warming and its potential effects have
their limitations, especially when viewing data about US landfall of hurricanes, he indicated. (By near-term, he said he meant less than 50
As a result, statistics on hurricanes that make landfall in the United States would not show any significant global warming signal for at least 50
years, Emanuel added.
(And here is the link to the above story at GE's website:
The issue of whether global warming is going on is a tough one and I, for one, believe that it is. But my question is this - are we putting ourselves
in harms way by moving to the coastlines of countries like the US and the UK (And even Spain, which was hit by tropical storm Vince, which has never
happened before) where we can get sideswiped by these monsters? And if we are - what next?