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.

Julian Alovisi, Assistant Vice President, Instrat®

In 2009, there were frequent reminders of the risks posed by earthquakes, and it was Asia again that suffered the most when two massive earthquakes struck Indonesia and the Samoa region in the space of a day. The most deadly earthquake of the year hit southern Sumatra in Indonesia on September 30, killing more than 1,100 people. The earthquake, measuring 7.6Mw, left around 500,000 people homeless after 250,000 homes were damaged, half of them completely destroyed.

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Julian Alovisi, Assistant Vice President, Instrat®

In direct contrast to 2008, no significant insured losses arose from tropical cyclones in 2009. In fact the 2009 hurricane season in the Atlantic was notable only for its below-average activity. For the first time in three years, no hurricanes made landfall in the United States, which explains why insured losses were substantially down in the country compared to the pervious year (see Figure 1). Figure 1 shows the amount and frequency of insured US property losses since 1992.

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Julian Alovisi, Assistant Vice President, Instrat®
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A record-setting Atlantic hurricane season and above-average manmade catastrophe losses put 2008 among the costliest years on record. While the economic downturn dominated the headlines throughout the year, lurking in the shadows was one of the most active hurricane seasons on record. Hurricanes Ike and Gustav, combined with other weather-related events and several large manmade catastrophe losses, triggered insured losses of USD50 billion in 2008.[1] Although weather-related events remained the largest source of losses (USD43 billion in total), several manmade catastrophic events triggered insured losses of USD7 billion, significantly higher than the annual average of USD4.8 billion.

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