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Forecast for average 2019 hurricane season may offer insurers reprieve

After dealing with back-to-back years of destructive hurricanes, U.S. insurers could get a much-needed break as forecasters are predicting a quieter 2019 season.

Colorado State University's Department of Atmospheric Science in April estimated that there would be five hurricanes in the Atlantic basin with two becoming "major" hurricanes. Storms classified as "major" hurricanes are those that become, at minimum, a Category 3 on the Saffir-Simpson Hurricane Scale, which equates to wind speeds of at least 111 miles per hour.

The Colorado State atmospheric science department later modestly increased its prediction, calling for six hurricanes this year. The updated forecast indicates that the 2019 hurricane season, which runs from June 1 through Nov. 30, will see fairly typical activity.

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There are competing weather patterns influencing Colorado State's 2019 forecast. Considerable uncertainty remains as to whether El Niño, a meteorological phenomenon where there is unusually warm water in the Pacific Ocean, will persist through the hurricane season. Warmer water in the Pacific can increase wind shear, which can prevent major storms from forming or weaken and break-up existing cyclones.

On the other hand, the Atlantic itself has warmed slightly faster than normal over the past few weeks, bringing the average sea surface temperatures to near normal. Warming sea surface temperatures are favorable for storm development.

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Activity during the 2017 Atlantic hurricane season was well above average with 10 hurricanes forming, six of which became major hurricanes. Three of those powerful storms, Harvey, Irma, and Maria, hit either the U.S. mainland or territories, causing aggregate damages of approximately $270 billion.

In total, four hurricanes hit the U.S. in 2017, with Harvey marking the end of a record of more than 4,300 days without a major hurricane making landfall on the U.S. mainland.

Several insurers recorded losses of about $3 billion or more from the 2017 hurricane season. Swiss Re AG reported that it expected insurance claims to be $3.6 billion from three major hurricanes and earthquakes that hit Mexico that year. Berkshire Hathaway Inc. reported losses of $3.01 billion, while American International Group Inc. estimated losses of between $2.9 billion and $3.1 billion.

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Two major hurricanes in 2018, Michael and Florence, caused roughly $49 billion in economic damages. Michael plowed into the Florida panhandle in mid-October 2018 causing $6.61 billion in total estimated insured losses. As of May 31, 147,325 storm-related claims had been filed with 23,194 still open, 104,199 closed and paid and 19,932 closed but not paid, according to the Sunshine State's regulator.

Initial impact from Michael was between $350 million to $550 million for Berkshire, while AIG calculated losses between $300 million and $500 million.

For its part, Florence significantly weakened to a Category 1 storm when it made landfall near Wrightsville Beach, N.C. While Florence was not major hurricane when it made landfall, it was the wettest hurricane on record in the Carolinas. The storm stalled after coming ashore and dumped up to 20 to 30 inches of rain in certain areas, causing widespread flooding.

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Colorado State puts the probability of at least one major hurricane hitting somewhere along the U.S. coastline at 54% in 2019, slightly higher than the 52% average over the last century.

S&P Global Market Intelligence provides links to external sites where these offer further, relevant information to our readers. While we ensure that such links are functional at the time of publication, we are not responsible in instances where those links are unavailable later.

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