December 24th, 2009

2009 Catastrophe Update: Outlook for 2010

Posted at 10:52 AM ET

Julian Alovisi, Assistant Vice President, Instrat®

 

Predictions that the El Niño phenomenon is likely to persist through the northern hemisphere winter and into spring could have a significant impact on natural hazards worldwide next year. El Niño events have historically produced floods and drought in the more impoverished regions of the world such as southern Africa and parts of South America. Prolonged dry periods may occur in Southeast Asia, Southern Africa and Northern Australia during an El Niño event, while heavy rainfall and flooding have hit Peru and Ecuador in the past. In the United States, El Niño’s potential impact includes above-average precipitation in the south, with below-average rainfall in the Pacific Northwest and the Ohio and Tennessee Valleys.

The El Niño phenomenon is also likely to curtail tropical cyclone development during the Australia cyclone season, which runs from November 1, 2009 to April 30, 2010. The GCACIC has predicted below-average activity in the Australia region for the 2009/10 season, with 8 tropical cyclones expected to develop, significantly less than the long-term average of 11 (click here for more details).

However, the first Atlantic hurricane forecast for 2010 has just been released by the CSU and it suggests the El Niño event will have dissipated by the time the season starts. Consequently, the CSU predicts an above-average hurricane season in 2010, with 11 to 16 named tropical storms, 6 to 8 hurricanes and 3 to 5 major hurricanes expected to develop. The forecast serves as a timely reminder that catastrophe activity remains unpredictable as the reinsurance industry prepares for 2010 renewals.

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