Every year there are new tools and products that can help the insurance industry understand named storm risks.  In this write-up, I highlight some of these new tools and products for the 2017 hurricane season, which starts today.   For ideas on the type of activity that is expected this season please see my previous update here:  May Tropical Update issued May 15th.

Advisories Will Be Issued Before a Storm Is Named

The National Hurricane Center (NHC), which decides when a named storm gets a name, will issue advisories for tropical systems before the tropical system has a name. In these cases, these tropical systems will pose a threat of bringing tropical storm-force or hurricane-force winds to land areas within 48 hours. For decades these tropical disturbances have been called ‘Invests’, or areas of investigation, and for the last few years the NHC has been giving Invests forecasts related to the chance of formation within the next five days.

Currently some re/insurance contract language is directly related to named storm activity. However, the advisories for these tropical systems that will likely impact land could now lead to earlier activity in re/insurance contracts where coverage is triggered by storm warnings or watches, as the NHC would previously wait for a storm to be named before issuing such warnings or watches. In most cases, these types of named systems would be in a developing stage just off the U.S. coastline and would highlight not only the likelihood of genesis of a named storm, but the possible strength of winds along the coastline.

Hurricane Humberto in 2007 is a classic example of where the NHC would have likely issued watches and warnings before Humberto was named if it took place in 2017. Humberto strengthened into a hurricane in a 24 hour period. Source: AccuWeather Inc. & NOAA

Storm Surge Watches and Warnings Are Coming 

For the last several years, the NHC has made large improvements to storm surge forecasts from named storms.  In fact, the detailed Potential Storm Surge Flooding Maps now rival the high resolution flood model simulations that are becoming common in the insurance industry by various Cat Modeling vendors.  However, another tool that might help the insurance industry is that the NHC plans to release storm surge watch and warning graphics to provide further guidance on where the greatest threat to life and property from a named storm might be.   The insurance industry is all too familiar with the hazards and damaging storm surge that occur with a threatening named storm and this guidance can help pin point areas likely to be most impacted by storm surge.

New storm surge watch and warning product for 2017 hurricane season. Source: NHC

Earliest Reasonable Arrival of Tropical Storm-Force Winds Will Be Forecast

The NHC has always provided guidance as to the position and timing of the center of a named storm; however, to provide more added value, the NHC will now be directly forecasting when tropical storm-force winds will begin to affect land. This will allow the insurance industry to better understand when winds greater than 39 mph are expected, which should aid in allowing more time for an insured to apply preventative measures to mitigate risk from damaging storms. Above 39 mph, winds can make it difficult and even dangerous to be outside continuing preparations for a tropical storm or hurricane.

The IBHS has some helpful hints to reduce hurricane damage to homes and businesses.


The Cone of Uncertainty Will Be Smaller

Every year the NHC reviews the accuracy of their previous five seasons of hurricane forecasts.  This review suggests the forecasts are getting better, and with that, the average error in the NHC forecasts that make up that famous cone of uncertainty will result in a smaller cone and just maybe more certain hurricane forecasts for the 2017 season.  Track errors have gone down over the last 10 years and forecasts have gotten better.  In fact, since 2007, the size of the cone of uncertainty at 120 hours (or five days) has shrunk by more than 35%.  Since last year, the size of the cone at 120 hours has shrunk by more than 10%.

The shrinking cone of uncertainty. Source Brian McNoldy Univ. of Miami

Hurricane Model Wars

As long as I have been studying meteorology there have been wars among the various forecast models as to which model is the most accurate at forecasting named storm activity.  This war was brought into the public limelight after Hurricane Sandy in 2012, when the American Model [Global Forecast System (GFS)] falsely forecasted Sandy to track offshore, and the European ECMWF model correctly predicted Sandy to make landfall in New Jersey.  Just like the various hurricane products described above, the weather models themselves are under ongoing improvements.  One item to watch this hurricane season is the upgrade to the GFS model on July 12th.  As part of these upgrades, the NOAA asks forecasting divisions like the NHC to run performance tests.   Although the tests might suggest better temperature forecasts or precipitation forecasts for different areas of the globe, one area where the upgraded GFS shows deficient skill is with hurricane forecasting.   The report I have seen from the NHC suggests for the 2014-2016 retrospective runs, in comparison to the 2016 GFS model, the 2017 GFS showed a 9-10% degradation in track forecast skill at 48-72h in the Atlantic Basin.  In terms of intensity forecasting, the 2017 GFS showed degradations in intensity forecast skill at nearly every forecast interval out to 120 hours in the Atlantic Basin.  The new GFS model also indicated less run-to-run consistency.  It likewise showed little overall improvements in TC genesis forecasts for the Atlantic Basin.

Evaluation of the proposed 2017 GFS implementation done by the NHC in February 2017

Another troubling factor is that the GFS model will likely have other fallouts with the regional models, such as the HWRF and GFDL, and the statistical models such as the GFEX.

Here is the quote from the NHC about the upgrade to the GFS model:

“The loss of short- to medium-range TC track and intensity forecast skill for the Atlantic basin in the proposed 2017 GFS is unacceptable to the National Hurricane Center.  We are also concerned about the lack of testing of the downstream impact of the 2017 GFS on the regional hurricane models.  Therefore, we oppose this implementation.”

As the insurance industry watches all of the various hurricane forecast model runs to determine where a hurricane might track, it might be good to put a bit more weight in the ECMWF model this season.  However, the ECMWF will also be upgraded on July 11th and very few people know what these upgrades will do to its hurricane forecasting.

Detail of this model upgrade can be found here:

http://www.emc.ncep.noaa.gov/gmb/noor/GFS2017/GFS2017.htm