Hurricane season has started. What can the industry expect?

The 2023 hurricane season is shaping up to be near normal as the current ocean temperatures (which fuel hurricane activity) and the El Niño patterns (which hinder it), are converging to neutralize one another, industry outlooks suggest.

For the P&C industry, this uncertainty may prove it difficult to predict the level of damage that could come from this year’s hurricane season, which starts in June and ends in November.

“Although the models are predicting a strong El Niño phase for the late summer with relative certainty, the level of hurricane activity will also depend heavily on the current high ocean temperatures. These conflicting signals make it difficult to provide a reliable forecast for this year’s hurricane season,” said Munich Re in its Hurricane outlook 2023.

The forecast

The El Niño–Southern Oscillation (ENSO) cycle, under which the El Niño and La Nina phases fall, is a recurring climate pattern that explains the temperature of waters in the central and eastern tropical Pacific Ocean. Meteorologists also indicate a third, middle phase—ENSO-neutral.

A transition from ENSO-neutral conditions to an El Niño phase is expected in the next couple of months, with a more than 90% chance that El Niño persists until late 2023, Moody’s RMS predicts.

“El Niño conditions in the Pacific typically increase the vertical wind shear across the North Atlantic,” the catastrophe modelling company explains. Essentially, El Niño often hinders hurricane activity as the atmosphere is less favourable for storm development and intensification.

On the other hand, sea surface temperatures in the tropical North Atlantic are expected to remain well above average throughout the season. This typically means an increase in hurricane activity.

Could we see another Hurricane Fiona?

While forecasts predict a second consecutive near-normal hurricane season in 2023, these forecasts only indicate the anticipated level of activity, and not the expected number of storms that could make landfall.

Comparatively, the pre-season forecasts for 2022 predicted an above-average season, although it transpired into a near-average season, Allianz Global Corporate & Specialty writes in its Atlantic Hurricane Season Outlook 2023.

The 2022 Atlantic hurricane season ended up near-average, “with 14 named storms, including eight hurricanes, two of which intensified to major hurricane status – Fiona and Ian,” Allianz writes. “An average hurricane season would typically see 14 named storms, seven hurricanes and three major hurricanes. This was the first near-average season since 2015.”

Canada saw one of its most severe hurricanes on record with Fiona, which caused upward of $800 million in insured damage, and even more in economic damage, as well as multiple peril-related deaths in the Atlantic provinces.

As Moody’s RMS notes, there are always exceptions to these forecasts:

“2010 was a particularly active year but only one tropical storm made landfall in the U.S. Conversely, Hurricane Andrew, one of the most intense and costliest hurricanes in U.S. history, was one of only seven storms to develop during the quiet 1992 season. It can only take one landfalling storm to make the season memorable or costly.”