Why Increasing Variability In North Atlantic Hurricanes Matters For Insurance Climate Change Scenarios

As new research highlights the growing variability of North Atlantic hurricane seasons due to climate change, we explore the implications for insurers, whose scenarios have traditionally focused on changes in mean risk.

North Atlantic hurricanes are a major contributor to global insured losses. Therefore, a key area of research for insurers has involved understanding how these storms may evolve in a warming climate. This research has primarily focused on how the mean risk will change, specifically the long-term average number of tropical cyclones.¹ However, a recent study led by the National Oceanic and Atmospheric Administration (NOAA) suggests that climate change is also amplifying the variability of North Atlantic hurricane seasons, making very active years—like 2005 and 2020—more common.² These very active seasons come with significant loss potential, raising an important question: By focusing on changes in average tropical cyclone numbers, are insurers