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10 - Forecasting US insured hurricane losses

Published online by Cambridge University Press:  14 September 2009

Thomas H. Jagger
Affiliation:
Department of Geography, The Florida State University, Tallahassee, FL 32306, USA
James B. Elsner
Affiliation:
Department of Geography, The Florida State University, Tallahassee, FL 32306, USA
Mark A. Saunders
Affiliation:
Department of Space and Climate Physics, University College, London, Holmbury St. Mary Dorking, Surrey RH5 6NT, UK
Henry F. Diaz
Affiliation:
National Oceanic and Atmospheric Administration, District of Columbia
Richard J. Murnane
Affiliation:
Bermuda Biological Station for Research, Garrett Park, Maryland
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Summary

Condensed summary

Coastal hurricanes generate huge financial losses within the insurance industry. The relative infrequency of severe coastal hurricanes implies that empirical probability estimates of the next big loss will be unreliable. Hurricane climatologists have recently developed statistical models to forecast the level of coastal hurricane activity based on climate conditions prior to the season. Motivated by the usefulness of such models, in this chapter we analyze and model a catalog of normalized insured losses caused by hurricanes affecting the United States. The catalog of losses dates back through the twentieth century. The purpose of this work is to demonstrate a preseason forecast tool that can be used for insurance applications. Although wind speed is directly related to damage potential, the amount of damage depends on both storm intensity and storm size. As anticipated, we found that climate conditions prior to a hurricane season provide information about possible future insured hurricane losses. The models exploit this information to predict the distribution of likely annual losses and the distribution of a worst-case catastrophic loss aggregated over the entire US coast.

Introduction

Coastal hurricanes are a serious social and economic concern for the United States. Strong winds, heavy rainfall, and storm surge kill people and destroy property. The destructive power of hurricanes rivals that of earthquakes. On August 28, 2005, Hurricane Katrina's winds reached 78 meters per second (m s− 1) in the central Gulf of Mexico, making it one of the strongest Atlantic hurricanes ever recorded.

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Publisher: Cambridge University Press
Print publication year: 2008

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  • Forecasting US insured hurricane losses
    • By Thomas H. Jagger, Department of Geography, The Florida State University, Tallahassee, FL 32306, USA, James B. Elsner, Department of Geography, The Florida State University, Tallahassee, FL 32306, USA, Mark A. Saunders, Department of Space and Climate Physics, University College, London, Holmbury St. Mary Dorking, Surrey RH5 6NT, UK
  • Edited by Henry F. Diaz, National Oceanic and Atmospheric Administration, District of Columbia, Richard J. Murnane
  • Book: Climate Extremes and Society
  • Online publication: 14 September 2009
  • Chapter DOI: https://doi.org/10.1017/CBO9780511535840.013
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  • Forecasting US insured hurricane losses
    • By Thomas H. Jagger, Department of Geography, The Florida State University, Tallahassee, FL 32306, USA, James B. Elsner, Department of Geography, The Florida State University, Tallahassee, FL 32306, USA, Mark A. Saunders, Department of Space and Climate Physics, University College, London, Holmbury St. Mary Dorking, Surrey RH5 6NT, UK
  • Edited by Henry F. Diaz, National Oceanic and Atmospheric Administration, District of Columbia, Richard J. Murnane
  • Book: Climate Extremes and Society
  • Online publication: 14 September 2009
  • Chapter DOI: https://doi.org/10.1017/CBO9780511535840.013
Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Forecasting US insured hurricane losses
    • By Thomas H. Jagger, Department of Geography, The Florida State University, Tallahassee, FL 32306, USA, James B. Elsner, Department of Geography, The Florida State University, Tallahassee, FL 32306, USA, Mark A. Saunders, Department of Space and Climate Physics, University College, London, Holmbury St. Mary Dorking, Surrey RH5 6NT, UK
  • Edited by Henry F. Diaz, National Oceanic and Atmospheric Administration, District of Columbia, Richard J. Murnane
  • Book: Climate Extremes and Society
  • Online publication: 14 September 2009
  • Chapter DOI: https://doi.org/10.1017/CBO9780511535840.013
Available formats
×