Forecasts for a wild hurricane season, extreme heat, and drought-stricken African farms

Hurricane forecasters predict an active 2024 Atlantic hurricane season, with up to 25 named storms, or twice the annual average. Such forecasts make big headlines. They're also a good reminder that real resilience to natural catastrophes means preparing for every eventuality.

Also in this edition of degREes: Extreme heat and vulnerable workers; insights for drought-threatened African farmers; better flood maps, stronger resilience; hail storm loss creep; and climate change's impact on wind power.

Whither hurricane season?

We don't want to send you into a tropical depression, but storm forecasters from Colorado State University to the US's National Oceanic and Atmospheric Administration all agree: ?conditions are ripe for a severe 2024 Atlantic hurricane season. Sea surface temperatures are at near-record levels, while a transition ?from El Ni?o to La Ni?a conditions also favours hurricane formation and intensification.

In their article "Preparing for hurricane season in an era of climate change" ,? Swiss Re Global Head P&C Solutions Ali Shahkarami and Erik Lindgren , Swiss Re Wind Perils Lead, also make this important and perhaps overlooked point about hurricanes: Regardless of whether forecasts are on the money or not, being ready for all possibilities is critical. Even in below-average storm years, costly damage can occur if just one hurricane makes landfall in an urban area. Hurricane Ian was a prime example .

To help our insurers and corporate clients better understand natural catastrophe exposures, Swiss Re has developed its CatNet??risk assessment tool as well as our Rapid Damage Assessment platform to support better risk knowledge, disciplined underwriting and effective claims management, whatever the future holds.

The mercury is rising

Extreme heat this year has been as widespread as it has been alarming: millions of US residents in June were under heat alerts. Athletes in the 2024 Olympics in France could face high temps, with some voicing "fears of dying on court." Meanwhile, Delhi, India, recorded its highest-ever temperature, 49.9 degrees Celsius, or 122 degrees Fahrenheit. One rickshaw driver told a news outlet , "My body can't take it."

Workers, often women earning a living outdoors, face severe health risks when the mercury rises. That's why Swiss Re's Public Sector Solutions (PSS) helped develop coverage to support people facing extreme heat. Recently, 46,000 Indian women got payments from the Women’s Climate Shock and Insurance and Livelihoods Initiative, launched at the UN's COP28 climate summit. This parametric insurance solution pays individuals during harmful heatwaves. Alongside climate mitigation efforts aimed at achieving the 2015 Paris Agreement's net-zero targets, parametric insurance is another tool to strengthen resilience against heat extremes.

In a recent Swiss Re webinar about "Climate Change and the Impacts on Life and Health," we spoke with Adrita Bhattacharya-Craven from The Geneva Association and Professor Ian Hamilton from the University College London. One thing they mentioned was how cities were often built for a cooler era, but now must adapt to protect growing urban populations. "Populations are moving to urban areas," Hamilton pointed out. "Urban areas have a higher risk of heat because of urban heat islands." For additional insights on climate change's effects on global health, you can also read Swiss Re Institute (SRI) report "The risk of a lifetime ."

Risk knowledge for vulnerable farmers

When you consider that some 40% of Morocco's 38 million people earn their living from agriculture, the prospect of drought is a huge risk. Last year was tough, and this year has brought little relief. Swiss Re, which provides agricultural protection via both traditional reinsurance as well as our Corporate Solutions unit, has been examining impacts of weather on crops in Morocco, with the aim of applying the resulting insights to help farmers in Africa and beyond adapt as they grapple with this evolving risk. Modernisation, technical innovation, and the ability to nimbly adapt insurance schemes to a dynamic risk landscape are critical in strengthening the resilience of agriculture to climate change.

Mapping the path to better flood protection

While Morocco is suffering from too little moisture, there's far too much elsewhere. Catastrophic flooding in Brazil, China, Germany and the US Midwest this year is a reminder that high water in many places, from rivers overflowing their banks, rising seas and heavy rainfall that can overwhelm urban infrastructure, will become more frequent and intense as our planet warms. Preparing for this reality requires knowing which places are most at risk. Anil Vasagiri, Swiss Re's Head of Property Solutions, writes about how his team has integrated US flood map data into Swiss Re's?CatNet??risk assessment tool , a big milestone toward better understanding this evolving peril. The US flood data is from Fathom , the UK-based water risk intelligence company that Swiss Re bought last year. Fathom creates the highest-resolution flood maps to help insurers and others ready themselves for what's already the costliest risk in many regions.

Come hail or highwater

After 2023 natural catastrophe losses were supercharged by hail and tornado damage, 2024 has seen more of the same . US insurers are reporting big losses from events in May. Swiss Re's Rita Müller , Swiss Re's Head of Claims Western & Southern Europe, and Balz Grollimund , Head of Cat Perils, recently wrote that managing such losses demands precise reserve setting. But as their article's title?"Tackling the toxic loss creep issue " suggests, it's not so easy.

For example, initial insured-damage estimates from Italian thunderstorms last summer came in at USD 2.2 billion, only to quickly soar to USD 6 billion. Why the big jump? Insufficient data on what was insured played a big role. As Müller puts it, “As we expect more extreme weather events, systemic loss creep is not acceptable and not sustainable for our industry."

And in case you missed it…

Climate change's impacts on human activities, even those meant to cut carbon emissions, are wide-ranging. Our SRI experts just wrote about how a warming planet means some regions will see lower average wind speeds, even as individual storms intensify. For wind power developers, insufficient wind may mean they can't fulfil their energy delivery obligations; conversely, fiercer storms could damage costly turbines. For more details about challenges, opportunities and the role of re/insurance in addressing such risks, read their report, entitled "The Winds of Change".

Thank you for reading!