Insured U.S. Hurricane Loss Under a 2°C Warmer Climate

Tropical cyclones, known as hurricanes in the North Atlantic, are a significant hazard for eastern North American, and Caribbean coastlines. The frequency and intensity of tropical cyclones in the North Atlantic has been observed to fluctuate between the 1970s and the 2020s. This has been a consequence of short- (e.g. El Niño Southern Oscillation), and longer-term climatic variability (Atlantic Multidecadal Oscillation (AMO)/atmospheric sulphate change) and anthropogenic-caused warming of the climate. A key question for at-risk communities and insurers therefore is how continued anthropogenic warming of the climate will impact tropical cyclone characteristics during the 21st Century. To understand the impacts of climate change on a given natural hazard, insurers commonly use exploratory scenarios. Here, we use a +2°C above pre-industrial climate scenario to analyse possible changes to insured losses from a present-day baseline due to tropical cyclones in the contiguous U.S. In this scenario, insured Average Annual Losses (AAL) are shown to increase by ~40% and the 1-in-200 Aggregate Exceedance Probability (AEP) loss by 26%. The scenario analysis also shows that the impacts are spatially variable, with the greatest relative impacts on the eastern seaboard. These results suggest building codes applied in Gulf Coast states should be applied at higher latitudes to mitigate current and future impacts of climate change.