Some regional insurers could face additional headwinds if early season forecasts of six named storms and eight hurricanes for the hurricane season of 2020 come to fruition, according to Kroll Bond Rating Agency (KBRA).
Any hurricane landfall could further push reinsurance pricing to less manageable levels for some insurance companies, KBRA added.
In April, hurricane forecasters at the Colorado State University (CSU) Tropical Meteorology Project team predicted six named storms and eight hurricanes in 2020, of which four will be major hurricanes.
The 2020 Atlantic hurricane season started ahead of schedule for a sixth consecutive year with the formation of Tropical Storm Arthur on May 16.
KBRA warned that carriers should assess the long-term impact of climate change on property portfolios as it relates to increases in the severity and frequency of wildfires, stalling hurricanes, and coastal and non-coastal flooding, regardless of what the 2020 Atlantic hurricane season brings.
The long-term average Atlantic hurricane season has 12.1 named storms, 6.4 hurricanes, and 2.7 hurricanes classed as category three or above. For the past four years, there has been an average of 16.3 named storms, 7.8 hurricanes, and 3.8 major hurricanes. There has also been four consecutive years with a category five hurricane, with two in 2017 and 2019.
As sea levels continue to rise, storm surge flooding is expanding further inland, which is causing escalating losses as population density in those areas grows.
Since 2015 there has been a named storm every year before the official start of hurricane season on June 1. The most notable was in 2016, when Hurricane Alex was the first hurricane to form in January since 1938.
Kroll Bond Rating Agencu, KBRA, Tropical Storm Arthur, Colorado State University