Every twist and
turn of a real-time hurricane can affect global financial markets, public
safety, or government and international aid agencies that provide assistance. Within
the (re)insurance space, the ability to understand forecast track, timing, and potential
hazard and loss impacts before landfall helps entities to prepare and execute
their event response processes effectively. This includes having adequate
capital to cover claims, setting up claim centers and planning policyholder
outreach, securing and positioning adjusters in areas that are likely to be
impacted, and determining what, if any, risk can be ceded to reinsurance or
clients, the traditional approach to quantify potential impacts ahead of a
landfalling storm involves selecting similar storms from the RMS® North
Atlantic Hurricane (NAHU) stochastic event set. While this generates vital
insights that can be extracted quickly from internal databases, there are
opportunities to provide earlier and more comprehensive insights into the storm
ahead of landfall.
To date, RMS clients have also benefited from real-time analysis of hurricane events through RMS HWind Real-Time Analysis products. These observation data-based snapshots and footprints have provided the industry with a standard “ground truth” representation of tropical cyclone wind field size and intensity before, during, and following landfall effectively helping to describe what the storm is doing and what the storm has done.
The first half of 2019 had been unusually quiet in the western
North Pacific tropical cyclone basin. Following the dissipation of the
strongest-ever February typhoon – Wutip, there were no subsequent typhoons
until Francisco reached Category 1 strength on August 4. A few days later,
Typhoon Lekima strengthened significantly on its approach towards the China coastline
and then became the strongest landfalling storm of the year so far.
Lekima Enters the Record Books
Typhoon Lekima made landfall in Wenling City, Zhejiang Province (pop. ~1.3 million), at 1:45 a.m. local time on Saturday, August 10, with an intensity equivalent to a Category 3 hurricane on the Saffir-Simpson Hurricane Wind Scale according to the China Meteorological Administration (CMA). With two-minute sustained winds of 116 miles per hour (187 kilometers per hour) and a central pressure at landfall of 930 millibars, Lekima became the third strongest tropical cyclone to impact eastern China after Saomai in 2006 and Wanda in 1956.
Imagine, instead of trying to communicate the prospective climate change future, you could just time travel to experience the weather of 2050.
In place of having to convince the city engineers of Paris or Chicago to invest in better street drainage and passive-cooling architecture, you could take them to experience their city in thirty years, well within the lifetime of the facilities and infrastructure they are constructing today. Rather than having to factor in seemingly arbitrary modifiers to flood or heatwave risks, to stress test your future insurance losses, you could visit an insurer already experiencing and pricing those future climate extremes.
In evaluating climate, we already have an alternative to time travel – we can travel in latitude. You could accomplish all these tangible goals, if you could identify the place which today already experiences your future climate.
Terrorism is a global menace that spreads like a virus along social networks. On March 15, 2019, Brenton Tarrant killed 51 Muslims attending Friday prayers at two mosques in Christchurch, New Zealand. Terrorism is the language of being noticed. Shortly before his rampage, he emailed his white supremacist manifesto, The Great Replacement, to the New Zealand Prime Minister’s office and media outlets, and shared a link with 8chan, a counter-culture website associated with political extremism.
Ever since the Christchurch mass shooting, 8chan users have commented regularly on their desire to beat Tarrant’s high score of victims. On Saturday, August 3, 2019, 21-year-old Patrick Crusius posted a four-page document, The Inconvenient Truth, on 8chan, which has since gone offline.
This expressed support for the Christchurch shootings, and blamed immigrants and first-generation Americans for taking away jobs. He also called for the deportation of immigrants. Such a white supremacist tirade is not unusual on 8chan. However, shortly after this posting, he headed for the Walmart near the Cielo Vista Mall, El Paso, Texas, and opened fire in the parking lot and store with an assault rifle. Mid-morning on Saturday, Walmart was busy with shoppers. His twenty-minute shooting spree left 20 dead with 26 people hospitalized. He then surrendered to police officers.
From our numerous client conversations, climate change as a business issue has risen high on the agenda, and this has certainly escalated over the last twelve months. There is a growing recognition of the need to quantify the impact that climate change will have on your business. But – where do you start with this? One of the major challenges is knowing what question to ask. With the inclusion of climate change scenarios within the General Insurance Stress Test (GIST 2019), which the larger U.K. insurers and Lloyd’s syndicates are required to respond to, the Bank of England Prudential Regulation Authority (PRA) is outlining one approach.
RMS is particularly well placed to support insurers in responding to the “Assumptions to Assess the Impact on an Insurer’s Liabilities” portion of the climate change section within GIST, which examines how changes in U.S. hurricane and U.K. weather risk under different climate change scenarios may affect losses.