Insurers brace for impact as sea surface temperatures soar | Insurance business America
Analyst compares data with last year
By Jonalyn Cueto
According to a report by Bloomberg Intelligence (BI), insurers and reinsurers such as Swiss Re and Munich Re could face difficulties due to record sea surface temperatures.
These rising temperatures, coupled with a weakening El Niño, pose a significant threat of higher catastrophe losses, potentially exceeding recent pricing adjustments.
“Unexpectedly, El Niño did not lead to above-average cyclone activity in the Western Pacific in 2023. The region experienced 17 named storms (including Dora, which crossed the Date Line in the Eastern Pacific). The only year since 1951 that had fewer named storms was 2010, with 15,” said Charles Graham, senior industry analyst at BI.
“Twelve of the storms became typhoons, including eight major typhoons. Mawar (the first Category 5 typhoon of the season) passed near Guam. Doksuri (the most destructive Western Pacific storm of 2023) came close to the Philippines as a Category 4 cyclone before causing heavy rain and flooding in Taiwan and eastern China. “Hong Kong still experienced record rainfall and flooding in September and October 2023 following Super Typhoon Saola, Tropical Cyclone Haikui and Severe Typhoon Koinu.”
According to BI, global sea surface temperatures from April to December reached historic highs since records began in 1850, with the North Atlantic particularly affected by a severe marine heatwave in the middle of the year. The heat wave spread across the Mediterranean basin in July and intensified in the summer months. Increased temperatures also occurred in the tropical Pacific, which was accompanied by the strengthening of El Niño.
These record sea surface temperatures led to above-average storm formation in the Atlantic, eastern North Pacific and Indian Oceans, causing hail and flooding in many regions. Meanwhile, the impact on the United States was mitigated by wind shear. Despite the increased number of named storms – 20 in total, the fourth most since 1950 – only Hurricane Idalia made landfall in the United States, striking as a Category 3 hurricane near Keaton Beach, Florida.
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