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May Severe Weather Update

The Onslaught of Severe Weather
Last week I posted some general ideas of what to expect over the next few months and briefly touched on U.S. severe weather. In this update I will provide a bit more detail on 2017 severe weather and what to expect over the next few months.
As mentioned in my last blog, this year is off to a record pace in terms of severe weather reports and U.S. insured loss. In fact, if you think a major severe weather event is occurring about every week so far in 2017, you’re likely correct as there have been only four severe weather free weeks so far in 2017 according to PCS wind and thunderstorm event designations.

Highlighted dates in 2017  in which PCS has a wind  thunderstorm designations

Historically, in terms of number of PCS wind thunderstorm events, the activity has been unprecedented with 19 events so far, which is 271% above the average number of events that have occurred since 2000.

Number of PCS event designations by year as of May 1

 

January – April Wind and Thunderstorm PCS losses in billions adjusted for CPI by year.

However, in terms of insured loss it is difficult to estimate how the recent PCS events might develop. Given the wide scope of impact, it would be safe to say at least another billion dollars (or two) could still be expected to develop from existing PCS designated events that have occurred at the end of April.  If this development occurs, insured loss through the end of April would be at a historically high level. However, it would be far lower than the costly severe storm year of 2011, where the loss was driven by the deadly April tornadoes in Alabama and the Joplin, Missouri tornado in May.  This highlights the remarkable luck that has occurred with tornado related insured loss over the last several years and especially this year since reports of tornadoes are running above normal for the first time since 2012.

Since the U.S. has not experienced a major marquee tornado loss this year, most of the insured loss continues to be related to hail or localized wind damage with smaller tornado losses mixed in such as the East New Orleans tornado on February 7th of this year.   Below is a break down how insured losses have compared to 2016 by state thru May 1st, keeping in mind further development of 2017 losses is expected.  As of right now Texas, which last year saw 47% of the total reported U.S. insured loss, is reporting a lower level of loss as of May 1 compared to last year at this time.

Insured PCS Loss Difference (%) from 2016

Possible Cause of Severe Weather
The main stream media continue to put focus on El Niño–Southern Oscillation (ENSO) and its possible impacts on this year’s severe weather, but severe weather cannot be tied to just one atmosphere climate forcer. As mentioned in my previous post, several bits of research have been done around this relationship of Gulf of Mexico Sea Surface Temperatures (SST) and severe weather Convective Available Potential Energy (CAPE). Currently, the SST, are at record high levels, which appears to be helping provide extra fuel for any storm system that traverses across the U.S.

 

However, another hypothesis is the relationship the Rocky Mountains and Northern Plains snowpack has on severe weather and tornado occurrence.   There is little research around this connection, but a quick crude analysis shows there is possibly a connection here suggesting in years when May snowpack is below normal in the Colorado basin U.S. tornado count in May is also below normal.  This is not the case this year with near record snow pack across the Rocky Mountain; however, the correlation between above average snowpack years and tornadoes is not as clean.  Combining this theory with warmer than normal Gulf of Mexico SSTs creating warmer, moister air and the extensive spring snowpack in the Rocky Mountains provides an interesting hypothesis that would be a great master thesis for some young inspiring meteorologist.

Forecasted Severe Weather

As shown with the severe weather losses and number of events the first few months have been active, but the first few months of the year historically make up only 19.5% of the severe weather activity on average as recorded by NOAA Local Storm Reports (Tornado, Hail, Wind). An active January thru April can quickly be superseded by a quiet May, June, & July. In attempting to understand if early activity will lead to an overall above active year, I used a trailing 17 year average to find above and below average periods. In this sample approach, over the last 17 years, 7 years were above average in the January-April period. Of the years that had an above average January – April reports of severe weather, only one year (2016) went on to have above average numbers for the remainder of the year, the remainder of those years ended quieter then normal.

In fact other researchers have done some similar studies that suggest a fast start does not necessarily mean the reminder of the season will be active.

Source: NOAA – Michael Tippett

Annual PCS January – April loss development as a percent of yearly total loss.

In terms of insured loss as of May 1, historically the U.S. insured loss is developed at 42% and we know there will be further development of 2017 losses that have occurred at the end of April. Regionally, it would appear severe weather will continue to be a common occurrence across the Southern Gulf States into the Carolinas into June. More typical periods of warmth across the Northern Plains will trigger severe weather into the summer. However, the stormy periods are not expected to last long like the current persistence pattern the south has seen so far this year.

Note on Wildfire Risk
Florida will continue to see a higher risk for wildfire, but after June the risk could shift to Western states. Despite significant rain and mountain snow across California early this year, wildfires will still pose a threat this summer. Significant precipitation has led to abundant vegetation which can serve as fuel for fires. Early in the season, heat may be inconsistent across California, but temperatures are predicted to rise in July, which will likely dry out this new vegetation and increasing the chances for fires.

BMS Seasonal Outlook April 2017

Summary:

  • An El Niño is forecasted to emerge for late this summer, but weather patterns suggest that it has already arrived.
  • Late spring-early summer warming will occur over the central and eastern U.S.; then, temperatures will trend cooler into the summer for the northern plains.
  • Heavy spring rains across the Gulf States and into the Great Plains will accompany storm systems, but nothing like past record years (like 1993).
  • Best matching analog years: 1982, 1986, 2004, 2006 and 2014

The Pattern

There has been no shortage for the insurance industry of severe weather during the first quarter of 2017. A warmer-than-normal start to the year, aided by record Gulf of Mexico sea surface temperatures, has produced a relatively active period of severe weather. Will this weather pattern continue into the next few months, or are we on the road to a quieter-than-normal weather pattern?

Severe weather reports from Jan 1 – April 20, 2017. Bar graph shows the number of reports per day so far this year.

In reviewing the first three months of 2017, the weather patterns have been dominated by Pacific influences, with storm after storm pounding the West Coast. As these storm systems moved across the U.S. and into the central U.S., they were enhanced by tapping a large amount of warm air from the Gulf of Mexico, which also produced warmth across the eastern U.S. This weather pattern has provided plenty of opportunity for severe weather, and resulted in several significant severe weather outbreaks that impacted the insurance industry. Some of the bigger events occurred on January 2, 21-23, February 28-March 1, March 6-7, and most recently, April 2-3.

So far in April, it would appear this weather pattern has continued the pattern established in March, with a series of infrequent, but very energetic storm systems digging into the western U.S. before lifting up into the mid-west and northeastern U.S.  This has meant that much of the U.S. should continue to experience similar above-normal severe weather activity; but these storm systems should start traversing a more northern track across the northern-tier states.  This pattern indicates that June-like weather might appear in April and May.

Long-Range Forecasts

Many long-range climate forcer signals can provide seasonal forecasters clues about what weather to expect over the next few months.  The El Niño-Southern Oscillation (ENSO), Pacific Decadal Oscillation (PDO), and Atlantic Multidecadal Oscillation (AMO) are some of the most common signals.  Although ENSO seems the most popular climate forcer in recent seasonal forecasts, a few words of caution are required:  fickle spring weather is notoriously misleading and results in difficult forecasts (this phenomenon is so familiar that it has its own name, the “spring predictability barrier”).   Second, we are technically coming out of a weak La Niña (which has a traditionally predictable outcome), but the atmosphere isn’t following its typical pattern following a weak La Niña.  Instead, the weather pattern over the continental U.S. reflected more of an El Niño pattern, with widespread warmth across much of the country and above-normal precipitation across parts of the southern tier and West Coast states.

The PDO has been positive for a record 39 months (during a positive phase, the west Pacific becomes cooler and part of the eastern ocean warms), but the weather pattern over the western U.S. has been anything but reflective of a positive PDO pattern.  Usually a positive PDO will lead to warmer and drier conditions in the western U.S., but this has not been the case over the last few months.

Weekly U.S. Drought Monitor, which uses a composite index on the level of drought that is occurring

Seasonal forecasting can also help us understand current areas of drought.  Large areas of moderate-to-severe drought can create a positive feedback loop, meaning that already-dry regions are more susceptible to warm and dry weather than non-drought areas.  As illustrated by the above map, patches of drought are currently scattered throughout the country, but these scattered patches are too insignificant to raise red flags for long-term warm and dry conditions over next few months.

Research suggests that the continued warm water temperatures in the Gulf of Mexico will likely mean severe weather will continue to erupt over the southern and central U.S. into late spring.  Historically, when the Gulf of Mexico trends warmer than normal, there is more energy to fuel severe storms and tornadoes.

Convective energy is needed for storm development and correlates to storm activity.

The Verdict

Evaluating recent weather patterns and various climate forcers produces the following analog years: 1982, 1986, 2004, 2006, and 2014.  These years suggest an active storm pattern that may result in:

  • Much of the U.S. experiencing near-normal temperatures between April-August
  • The western U.S. and southeast warmer then normal
  • The northern states slightly colder than normal

Combining the analog years yields the following temperature and precipitation anomalies. Note the temperature scale is less than a 1 degree +/- long term average.

However, above-normal national temperatures now and into early summer should give way to more normal temperatures or cooling temperature patterns in the Great Plains later in the year.  Hit-or-miss precipitation across much of the country will be a by-product of severe weather and will provide rain in some areas but not others.  As a result, dry conditions in the southeast could progress into summer.  Severe weather should remain active until May, with activity waning to more normal levels as summer progresses; but overall, the insurance industry should expect to see much higher levels of insured loss than in the last few years.

 

Tis the season for severe weather across the south, but it’s been extremely quiet so far?

Tornado and hurricane drought?
It’s no surprise that the recent lack of hurricane landfalls has drawn the attention of the insurance industry. The long-standing Florida hurricane drought ended with hurricane Hermine’s landfall on September 2, and of course, Matthew threatened to end the major U.S. hurricane drought as well. However, there is another drought quietly confounding the insurance industry. After 2011 and reports of a “new normal” for severe weather, several years have now passed with lower than normal tornado activity.
So far the 2016 U.S. tornado count is among the lowest of the last 11 years. As of Nov 27, 981 tornadoes touched down in the U.S., which is 303 less than the 17-year average for that time period.

Tornado counts are below the 17-year average in eight of 10 months so far this year. Most recently, tornadoes in September and October were well below average. This is despite hurricane Hermine, which spawned eight confirmed tornadoes and hurricane Matthew which spawned two confirmed tornadoes. Hurricanes can produce a significant number of tornadoes, but neither Hermine or Matthew produced very many.

torgraph-big

U.S. Inflation Adjusted Tornado Count from 1950. It shows that this year could take the record for the lowest inflation adjusted tornado count since 1950.

This year’s unusually dry tornado spell started in June, which produced only 86, the fewest in that month since 1988. The 17-year average number of tornadoes for June is 216. February, March and August are the only months that featured above-average tornado activity this year.

Had it not been for a concentrated outbreak of 35 tornadoes in Indiana and Ohio on August 24, August would have finished below its 20-year average as well. Though the tornado pace has been slow for the year as a whole, February was an exception. With 138 confirmed tornadoes during the month, it was the second most tornadic February since 1950. Only 2008 produced more February tornadoes: 146 total tornadoes, including the record “Super Tuesday” outbreak of 84 tornadoes.

avgnovtornado

 

2016tornadoreports

2016 Tornado touch down locations and daily total count which shows the lack of tornadoes since the end of September.

Through last Monday, November 21, zero tornadoes had been reported this month, which is highly unusual. With an average November tornado tally of 58 (1991-2010), we are in near-record low territory again this month. Only four other years since the 1950’s have witnessed comparably low tornado activity in November (according to NOAA Storm Prediction Center Data): zero tornadoes in 1976, two tornadoes in 1954, and three tornadoes each in 1980 and 2009.

Severe Weather Insured Losses

As one might expect, insured losses from severe weather are often a matter of luck, and although there were some powerful tornados this year, very few impacted large populated areas. Yet despite scant tornado activity, 2016 is already the second costliest severe weather year in recent years, totaling $16.6B in insured loss. This total is far behind the $28B of insured loss experienced in 2011 as a result of several deadly and damaging tornadoes across the southeast U.S. Large insured loss losses this year were likely driven by wind and hail events. In fact, over 80% of U.S. insured loss results from hail and wind events, but luck is an ever-present factor. This year, bad luck settled over the state of Texas. Several hail storms impacted large metropolitan area such as Dallas-Fort Worth, San Antonio and El Paso, and these storms have driven the large losses experienced in the U.S this year. In fact, almost half of the total loss of $7.9B so far this year occurred in Texas.

Louisiana was also hit hard by severe weather and flooding, and that bad luck could continue today with a new severe weather threat.

This week’s severe weather threat

Tornadoes happen all year, but climatologically two seasons exhibit peak activity. Spring is prime time for tornado activity. That’s when warm Gulf of Mexico air clashes with winter’s remnant cold as dry air masses spill over the Rockies. Another peak arrives in October and November, but tends to be more erratic throughout fall. In something of a reverse of the spring air migration, jet streams again traverse and target specific parts of the country as the calendar changes from summer to winter.
It’s been over seven weeks since the U.S. has had a day with over 50 severe weather reports, and today this trend may snap due to expected severe weather across the south-central U.S. The HRRR model is forecasting the formation of prefrontal super-cells by mid-day Monday across central and northern Louisiana.

hrrr_ref_louisiana_7

Today HRRR Forecasted Radar for 2 CST over the South Central U.S.

This severe weather threat will continue to move across the southeast U.S. over the next weeks, which in some cases will be welcome given the ongoing drought conditions that triggered recent wildfires.

So although it has been quiet and the U.S is at near near-record low tornado fatalities and low tornadoes counts, we shouldn’t forget what occurred in December of 2015. That December began with a record-low of 10 tornado deaths. Then waves of tornadoes struck the South and the yearly toll jumped to 36. With a more energetic weather pattern ahead, we should stay tuned and remember that droughts won’t last forever.

Fading El Niño – What’s Next For Insurance Industry?

A Q1 and El Niño wrap up

With winter and Q1, 2016, behind us, the insurance industry can review the active weather pattern and resulting insured losses. As mentioned in my blog post last fall, Florida experienced lots of weather activity, which is typical during strong El Niño winters such as this past one.  However, overall insured losses, while not historic, haven’t been benign either: Q1 losses ran about 31% above the 10-year average insured loss according to my estimates with Texas and the Southern Gulf states taking the brunt of the insured losses.  Although the remarkable blizzard (January 22–24) resulted in limited insured impacts based on the Property Claim Services (PCS) initial estimate, winter storms increased losses in the West.  In fact, the PCS issued four separate bulletins for the state of California more than any other year during the last 10 winter seasons.  Examples like this highlight the relatively predictable impacts of an El Niño winter.

After virtually tying the record for the strongest El Niño (as defined by a three-month running mean sea-surface temperature anomaly in the so-called Niño 3.4 region of the central and eastern equatorial Pacific Ocean), sea-surface temperatures (SST) are steadily cooling. NOAA’s March El Niño outlook suggests this El Niño may be all but gone by late spring or early summer.  In fact, some climate models and a recent government outlook suggest a shift to its opposite, La Niña by this fall.  As a result, the insurance industry needs to consider the potential for higher losses which are often associated with the La Niña phenomenon.

March_ENSO_Anomaly_SubSurface

Looking below the surface in the ocean waters in the Central Pacific, you can also see a trend of colder-than-average water working its way eastward across the International Date Line, eating away at the warmer-than-average equatorial Pacific water from below – another sign of a weakening El Niño.  Source: CPC

The unpredictable El Niño-La Niña relationship

Scatterplot showing the relationship in El Niño / La Niña states from one year to the next, for every year since 1950 in which an El Niño occurred. Each dot represents a pair of “year 1 vs. year 2” El Niño / La Niña states. In general, the stronger the El Niño (higher values on the x-axis), the stronger the subsequent La Niña (lower values on the y-axis). For more details and a larger version of the graphic, see the associated ENSO Blog post

Scatterplot showing the relationship in El Niño / La Niña states from one year to the next, for every year since 1950 in which an El Niño occurred. Each dot represents a pair of “year 1 vs. year 2” El Niño / La Niña states. In general, the stronger the El Niño (higher values on the x-axis), the stronger the subsequent La Niña (lower values on the y-axis). For more details and a larger version of the graphic, see the associated ENSO Blog post

El Niño and La Niña events each typically last for only 9-12 months, and they typically recur every 2-7 years, according to Columbia University’s International Research Institute for Climate and Society.  Flip-flops from a strong El Niño to La Niña are not unusual. For example, the record-setting El Niño of 1997-98 was almost immediately followed by La Niña the following summer, reaching moderate-to-strong intensity before finally ending in Spring, 2001. A similar pattern followed the strong El Niño of 1972-73.  However, neutral conditions followed three other strong El Niño’s that occurred in 1982-83, 1965-66 and 1957-58.

What Does It All Mean for the Insurance Industry?

Expect higher losses! If La Niña develops, historical insurance industry losses suggest worldwide impacts, but likely these impacts won’t be fully felt until 2017 when the La Niña is fully developed.  However, there are some broad trends that have shown up in past weakening El Niño events that could give a hint on what to expect in 2016.

Severe Weather Season

Various climate forcers such as North American snowpack, Pacific Decadal Oscillation and Gulf of Mexico SST can influence North American severe weather, muddling the impacts that El Niño or La Niña might have. Disregarding these factors and only looking at past weakening El Niño events that transitioned to La Niña, the data suggests weather will vary based on location. A moderate-to-strong La Niña tends to promote severe weather across the Southeast (conversely, El Niño promotes severe weather in Florida, the high plains of Texas, and up through Colorado to Minnesota).

Although insurance loss data suggest on average a La Niña year sees about double the insured loss that might occur during El Niño years, the reason for increased losses may have more to do with the location of the losses than the severity of the storms. La Niña years seem to favor stronger storms over the Southeast (Dixi Alley). This area is densely populated, which may lead to more claims of severe weather.  But like with any weather peril, even a quiet year can have an EF-5 roll into a city and cause devastation.  In the end, insured losses are largely based on good luck or bad luck.  Example: if the Joplin tornado of 2011 had shifted a few miles south during that La Niña year, no one would talk about it today.

This severe weather season the key could be the summer heat expected in the central Plains and Great Lakes could mix with the wet spring expected in Texas and Louisiana and increase instability leading to storms in the Northern Plains and Ohio River Valley.

Atlantic Hurricane Season 2016

Much hype accompanied last hurricane season due to El Niño’s tendency to produce stronger wind shear, which tends to tear apart developing or mature tropical cyclones and result in less tropical development. Sure enough, June through October, 2015, Caribbean wind shear was the highest on record since 1979, according to Dr. Phil Klotzbach, tropical scientist at Colorado State University (CSU). The team at CSU has also in the past pointed out that the timing makes a big difference:  If a transition to La Niña happens late in the year, it’s less likely to influence the Atlantic hurricane season.  The forecast team at CSU will issue their first outlook for the 2016 Atlantic season on April 14.

However, the CSU team and other leading researches have pointed out that U.S. hurricane impact rises dramatically in a La Niña or neutral season compared to an El Niño season. On an annualized basis since 1950, major hurricane landfall rates during La Niña years are 20% higher than neutral conditions and almost 280% higher than El Niño rates.

Hist_ENSO_Impacts

General stats of past La Niña and El Niño Atlantic hurricane seasons and the number of landfalls with adjusted historical total insured losses when accounting for all hurricane and tropical storm impacts for those years.

With El Niño potentially vanishing by the start of the 2016 hurricane season, the chance increases for tropical cyclones surviving to make U.S. landfall. If El Niño was the only factor, that is. I expect the team at CSU to discuss El Niño / La Niña, but also discuss the possible switch to a cool mode of the Atlantic Multidecadal Oscillation (AMO), which might suggest less storm activity in the next decade. This is because the far North Atlantic has been quite cold for about three years, and the SST pattern continues to cool (evolving as it did in the early 1960’s [the last time the AMO switched from a warm phase to cool phase with SST cooling in the North Atlantic and a slow progression of colder anomalies propagating into the tropical Atlantic and with warmer anomalies hanging on closer to the U.S. coastline).

The odds may shift a bit toward a more active Atlantic hurricane season in 2016, but El Niño’s absence doesn’t guarantee that outcome. Since the 2006 season, there have been some very active seasons with very few landfalling hurricanes, and the insurance industry still awaits that major hurricane landfall.

Summary:

El Niño, La Niña, or the lack of either (known as the neutral phase), is only one large-scale forcing on the atmosphere. Its presence or absence does not definitely determine severe weather or hurricane.  Climate models indicate a La Niña will follow the recent powerful El Niño, and we can look at past weather patterns to speculate future impact on particular insurance portfolios.  Right now the best analog years would be 1988, 1995, 1998, 2007, and 2010 during those years PCS losses averaged 10.6B, but what is more important is using those years to understand where the severe weather and hurricanes occurred to get an ideas of what might occur this year.  For example: U.S. landfalling hurricanes were limited, but in almost all those year the western Caribbean and Gulf of Mexico experienced some named storm activity.

2016_AnalogYears_v2

Historical hurricane tracks of the 1988, 1995, 1998, 2007, and 2010 hurricane seasons  Source: NOAA Historical Hurricane Tracks

Climate forcers like El Niño and La Niña can help predict the frequency of overall extreme weather activity, but truthfully, long-term predictions about the number of named storms, location of landfall or the power of other severe weather is impossible. The best way for the insurance industry to prepare is to carefully consider the risks and their potential impact. BMS’ weather risk management module in iVision can help carriers better understand their risk and manage portfolio accumulation in areas prone to hurricanes and severe weather. iVision also has tools to track forecasted hurricanes, including detailed hurricane wind fields. It has several severe variables around severe weather which can be combined with hurricane layers to provide a holistic view of an event and help carriers understand the range of potential loss outcomes from extreme weather events.  Learn more about the Hurricane Risk Management Module and Severe Storm Risk Management Module.

El Niño saves Florida from hurricane winds, but other severe weather could be costly this winter

The central and eastern Pacific experiences a lot of year-to-year variability in Sea Surface Temperatures (SST). Some years the water is much warmer (El Niño), and some years the water is much cooler (La Niña). The current phase of the El Niño/Southern Oscillation (ENSO) is approaching its peak warmth with near-record SST anomalies. This relatively predictable El Niño weather pattern should help the insurance industry prepare for weather patterns that could cause insured losses this winter.

Although the media often highlights the negative aspects of an El Niño weather pattern, there are many positives for the insurance industry: overall insurance loss data suggests that an El Niño weather pattern generally produces better financial results for the industry than a La Niña weather pattern.

Hurricanes, which are the largest cause of insured loss across the U.S., are a great example to show how El Niño has improved financial results. An El Niño weather pattern increases wind shear over the tropics, which significantly reduces the season’s Atlantic hurricane activity and therefore lowers the probability of a U.S. hurricane making landfall – ultimately leading to lower insured losses overall in El Niño years. However, as hurricane season ends and winter begins, El Niño may impact Florida weather, and consequently the insurance industry, in less financially favorable ways.

ElNino_Florida
Previous El Niño patterns suggest that the Gulf Coast will see cooler and wetter conditions this winter; not because of numerous arctic outbreaks, but because of the stronger influence of the subtropical jet stream. Storm tracks will then move farther south producing more clouds and rain. On the positive side, more precipitation reduces the risk of wildfires across region. On the negative side, these conditions can also lead to severe weather that includes hail and tornadoes.

Figure 1 shows a comparison of storm tracks during El Niño versus La Niña years.

Florida_ElNinoStormTrack

Figure 1. Winter storm tracks in El Niño versus La Niña years. (Source: NWS)

Figure 2 shows that the El Niño severe weather signal is most pronounced in central and south Florida and illustrates increased tornado reports from National Weather Service (NWS) local storm report data for the period, 1950-2014. El Niño years produce 77% more tornadoes than ENSO-neutral years and 53% more tornadoes than La Niña years. Further, it should be noted that Florida tornadoes typically occur in the evening hours which can increase fatalities.

FL_ENSO_Statistics

Figure 2. NWS severe weather local storm reports between November and March during Neutral, La Niña, and El Niño years for the period 1950 to 2014 in Central and South Florida (NWS Melbourne, Tampa and Miami Warning Areas).

Property Claims Services report that Florida insured wind and thunderstorm event losses vary drastically between El Niño and La Niña years: a whopping 152% difference between an El Niño year and La Niña year, and an even greater difference (188%) between an El Niño year and ENSO-neutral year. The higher loss levels are driven partly by specific large loss events that impacted Florida during El Niño years. The following tornado outbreaks are prime examples:

  • The 1998 February 22 – 23 “Kissimmee” outbreak continues to live in infamy as the deadliest tornado event in Florida history. In all, 12 tornadoes touched down across Central Florida. The strongest was rated EF3 and was one of the strongest tornadoes ever recorded in Florida.
  • The 2007 February 2 “Groundhog Day” outbreak was deadly and costly for Sumter, Volusia and Lake Counties and for the insurance industry: it caused over $100 million in insured losses and damaged or destroyed over 2,000 structure.

Tornadoes are highly correlated to the other perils that result from severe thunderstorms, and these other perils such as hail can result in high insured losses. In fact, one of the costliest severe weather events in Florida history was during the 1991-1992 El Niño winter which produced large hail storms that hit the Orlando metro area on March 25. Some locations reported hailstones the size of grapefruit; other locations reported that small hailstones piled up inches deep. At the time this event was the largest insured disaster in the state history; it even topped the notorious hurricane Donna in 1960. Unfortunately, the devastating hail storm was soon eclipsed when Andrew blew through southern Florida later that year.

Of course, global factors other than the ENSO cycle complicate seasonal forecasting. From soil moisture in the U.S. to winds way up in the stratosphere and early winter Eurasian snowpack, these other factors sometimes cancel each other out. However, as shown above, the data suggest that although Florida has not seen the wind blow as a result of a hurricane in over a decade, El Niño could cause the wind to blow from severe thunderstorms that ultimately lead to potentially higher-than-expected severe weather losses across the state.

Active Severe Weather Season? Yawner Hurricane Season? – Think Again

After the long winter much of Eastern North America experienced, it is sad to say we are rapidly approaching mid-summer. This also means we are past the climatological peak of the U.S. severe weather season, and fast approaching the peak of the Atlantic hurricane season which occurs around September 10th. To many it may seem that the severe weather season has been an active one, while the hurricane season, to this point, has been a yawner. The data suggests, however, that the complete opposite has occurred.

U.S. Severe Weather Season

In terms of local storm report counts from the Storm Prediction Center, this year’s severe weather season has been below normal. The most noteworthy events are attributed to the above normal, and sometimes record breaking, precipitation in the Central Plains and Ohio River Valley which resulted in widespread flooding. In a normal severe storm season, defining events would be attributed to hail/wind/tornado events and not large precipitation events. According to one source, the number of flood losses, or more specifically sewer backup claims, are outpacing hail claims this season.

As many of us know, flood damage is often excluded under standard homeowners, renters, and business insurance policies. Due to this and the overall lack of severe weather, it is not surprising that insured losses to date are also below normal. In fact, PCS wind and thunderstorm insured losses are still falling below the 10 year average ($9.3 billion) by 53.5%. As of July 9th, $5 billion in insured losses have been reported with two outstanding wind and thunderstorm events. This season, we have yet to see a marque severe weather event causing over $1 Billion in insured loss. Comparing to previous storm seasons, one has to go back to 2005 to be this late into the severe weather season without experiencing a $1 Billion dollar insured loss event.

The severe weather outbreaks this season have been limited due to fluctuating weather patterns, resulting in below normal insured loss. A similar pattern, if it persists, should provide more episodes of severe weather, with less risk of tornadoes and a higher risk of high wind events (derechos) across northern states. This suggests that a marque severe weather event ($1 billion or larger insured loss) is unlikely as we finish out the season. Since 2001, only one marque event has occurred after July 10th which was the Phoenix hail storm in the Fall of 2010.

Atlantic Hurricane Season

Although North Atlantic hurricane activity has been quiet since Tropical Storm Bill (Texas landfall, June 16th), the development of named storms is a major weather concern for the insurance industry. This year, there has already been two named landfalling storms with Bill being the first PCS hurricane event since Sandy in 2012. To see a similar landfall activity before June 16th, one has to go back to 1871.

In terms of Accumulated Cyclone Energy (ACE) year to date, as of Monday July 6th , the basin was running 314% above normal. As we approach the peak of hurricane season, every day that passes without activity will decrease what started out to be a very above normal year statistically. As of July 10th, the North Atlantic ACE is already down to 157% above normal.

2015HUforecast

Summary of the most recent 2015 North Atlantic season forecast

All forecasts continue to point to a below normal season with many negative factors weighing in on why named storms will have a difficult time developing in the Atlantic basin. Namely,

Insurance Industry Action Items

Long range seasonal forecasts still call for named storm development regardless of the negative factors listed above. In fact, some forecasts call for the expected development of named storms closer to the U.S. coastline, similar to areas impacted by Tropical Storm Bill and Ana. In an El Nino year, insured losses are typically lower than average; however, it only takes one significant event to impact the industry.

ENSO

 

The insurance industry should keep an eye on the Madden-Julian Oscillation (MJO), which is a large scale oscillation that propagates eastward across tropics of the globe. When an area of the tropics is under the influence of the MJO, it tends to enhance tropical activity. This year already, we have seen two strong MJO pulses partially trigger two different clusters of named storm development in the West and East Pacific. Carriers can track the MJO to get a better idea of when heighten activity could start to occur in the tropical Atlantic basin. The current MJO appears to be moving into the East Pacific region now, and if it sustains itself, could enhance tropical convection in the Atlantic basin toward the second half of July. This could allow the insurance market to take advantage of LiveCAT markets to protect specific programs.

The other area of concern for U.S. carriers could be Hawaii which has seen an unusual amount of hurricane activity over the past three years. Tropical Storm Flossie passed within 100 miles of the islands in 2013, and an unprecedented three hurricanes in one year passed within 200 miles of Hawaii in 2014. Statically speaking, named storms are about 3 times more likely to come within 100 miles of Hawaii in El Nino year versus in a La Nina year. Keep this in mind knowing that there is an El Nino strengthening in the Pacific.

HI_HU_ENSO_CSU_

Moore, OK Tornado Frequency

Over the last two days, severe weather has returned to the Central Plains in the U.S. This recent outbreak was by no means historic but it has become the most active severe weather outbreak thus far in 2015, with eight tornadoes, 31 wind reports and 162 hail reports, 13 of which were reported as 2″or larger.  Given the tornado wind damage that occurred in the towns of Moore and Sand Springs, OK, it comes as no surprise that PCS issued its first Wind and Thunderstorm CAT bulletin of the year, although it is abnormally late for such an issuance, due to the lack of severe weather.  In fact, since 2000, typically the insurance industry would have experienced just over 3, nearly 4 PCS loss events with an average of $1.3B in losses by the end of the first quarter.

BMS iVision March 25 Hail Analysis

BMS iVision March 25 Hail Analysis

Above is a look at the BMS iVision Verisk Climate hail size swath overlaid with the various Storm Prediction Center Local Storm Reports from the March 25 severe weather outbreak over the south-central plains.

There are no official tracks or ratings of the two tornadoes that impacted the cities of Moore and Sand Springs yet – those will come later today from the Tulsa and Norman, OK National Weather Service (“NWS”) offices – but, sadly, it has been verified that the Sand Springs tornado was the first deadly storm of the season. This comes later than the 20-year average for the first killer tornado of a given season (typically, February 11), but one month earlier than that of the 2014 season, which occurred on April 25.

The tornado that hit Moore, thankfully, looks to be not nearly as devastating as the same tornadoes that hit the city in 1999 (F5), 2003(F4) and 2013(F5). It is interesting, nonetheless, because it is not only the fourth tornado to hit the same general area in the last 17 years, but it also tracked in an unusual direction.

OKC Tornado Track 1880 - 2013

OKC Area Tornado Track 1880 – 2013

The image above, created by the NWS office in Norman from the work of Tom Grazulis, a tornado historian, shows many tornadoes that track over the Moore/Oklahoma City area travel in a northeast direction. The tornado yesterday, however, tracks in an atypical southeast direction, as the preliminary NWS map below illustrates.

Prelimimary NWS March 25 Moore, OK Tornado Track

Preliminary NWS March 25 Moore, OK Tornado Track

The other thing that becomes apparent from analysis of the 156 documented tornadoes that have occurred in the Oklahoma City metro area (OKC), is this location appears to be a magnet for tornadoes – it experiences an average of just over one each year. Since weak tornadoes were not always documented prior to 1950, this number is likely well underestimated, according to NWS. In fact, Grazulis’ study confirms the OKC region has experienced 13 violent tornadoes (F/EF4 or stronger) since 1880, including the May 19, 2013 and May 20, 2013 tornadoes in Shawnee and Moore, respectively. Also through 2013, OKC experienced two or more tornadoes on the same day 26 separate times, with only three time periods since 1950 with an over two-year lapse between tornadoes.

However, OKC and Moore are not the only areas that have experienced similar tornado frequency. Statistical work from Florida State University’s Jim Elsner suggests there are many areas comparable to the size of Moore with just as many or more tornadoes occurring since 1950, as shown in the image below.

FSU Jim Elsner  analysis of areas comparable to the size of Moore, OK with as many or more tornadoes than Moore since 1950.

FSU Jim Elsner analysis of areas comparable to the size of Moore, OK with as many or more tornadoes than Moore since 1950.

So, as the insurance industry prepares for the severe weather season, it is already apparent that Tornado Alley is appropriately named, since there are many areas within this region that experience the same tornado frequency as Moore. But, there is still no clear reason why, in recent years, Moore keeps getting hit by tornadoes. Studies have shown the affects of urban environments can sometimes enhance rain from thunderstorms downwind of cities (and Moore is just south of OKC), but little work has been done to determine if cities actually impact tornado formation.  Future work in the insurance industry might answer these questions.

 

Severe Weather in a Warming World

Andy Siffert, BMS’ resident Meteorologist, discusses Severe Weather in a Warming World

As we have all seen in the media it would appear that on May 15 Mother Nature has turned on the severe convective storm season, which to date had been historically quiet in terms of insurance losses and severe convective storm reports.

Since May 15 the preliminary tornado count stands at 305 tornadoes, but considering the nation is currently at the climatological peak of the severe convective storm season and the tornadoes are occurring precisely where historically they should occur, the impacts of the severe weather should be expected and can be easily explained by understanding the current weather pattern.

The reason we have seen the recent uptick in severe weather activity to more normal levels is the spring of 2013 has been climatologically cooler than normal over the eastern two-thirds of the country, which has kept instability levels low. This is most likely due to a weather pattern associated with the a negative phase of the Arctic Oscillation (AO), which has kept a low amplitude jet stream pattern in place over the eastern portion of the U.S., allowing cool air from Canada to spill southwards into the U.S. blocking warm moist air northward progression from the Gulf of Mexico.

Starting in mid May a shift in the jet stream winds resulted in a weather pattern that allowed for frequent weather systems to draw upon the warm moist air from the Gulf of Mexico to clash with the cooler, drier air moving east off the Rocky Mountains. This different weather pattern has provided the main ingredients necessary to produce what have been widespread multi-day severe weather events.

Understanding weather patterns can fluctuate explains the last three years of tornado activity, which have experienced both a record minimum and record maximum tornado count. These two extremes of recent tornado surplus (2011) and the current tornado drought are rare and considering they are back to back it makes the occurrence even more unusual. However, these patterns have resulted in several contradictory views on the impact a warming world might have on severe convective storms in the U.S. In a warming world should we experience more seasons like 2011 or fewer tornadoes like 2012? Are extreme tornadoes like Moore, OK, a result of this warming world?

In the latest BMS Introspect – Severe Weather in a Warming World and Its Impact to the Insurance Industry we attempt to answer these questions.