The Guardian: Ivan intensifies terrible hurricane year for insurers: “Shell was shutting down productions in the gulf as a precaution yesterday and oil prices were rising on fears that damage could lead to sustained reduced production.” (ShellNews.net)
Jill Treanor
Tuesday September 14, 2004
The 2004 hurricane season is expected to be costly for insurers, with early estimates of $8bn (£4.5bn) of losses from just one of the storms that have hit the United States this year.
The estimate by Aon does not include the impact of Hurricane Ivan, which was last night expected to hit Cuba after rampaging through Jamaica over the weekend before entering the Gulf of Mexico tomorrow.
Shell was shutting down productions in the gulf as a precaution yesterday and oil prices were rising on fears that damage could lead to sustained reduced production.
Nicholas Bollons, a catastrophe analyst at Aon, estimates that Hurricane Charley, which hit Florida in August, will lead to $5bn to $8bn of losses alone for insurers. Three million people were evacuated to avoid Charley but 25 lost their lives.
Mr Bollons had expected 2004 to be worse than average because the National Oceanic and Atmospheric Administration had forecast up to 15 tropical storms with up to eight hurricanes, two to four of which would be severe.
On average there are five to six hurricanes a year. Hurricane Alex was the first of 2004, followed by Charley and Frances in mid-September. Ivan is still raging and was not included in Aon's research.
Aon has kept track of all the national disasters that have taken place to the end of August and identified more than 8,000 fatalities, with 355 of these being in August.
The statistics do not just cover hurricanes but also monitor avalanches, fires, volcanic activity and earthquakes - like the one measuring 5.4 on the Richter scale which hit Turkey last month.
Most of the analysis for August, however, focuses on hurricanes and finds that as the season is not due to end until November, the price could be high for insurers.
Together, though, the hurricanes are not thought likely to surpass the $30bn of damage inflicted by Hurricane Andrew in 1992, which resulted in insurer losses of $16bn.
In any natural disaster not all the damage suffered will be covered by policies - which is why insurers attempt to estimate losses. But Mr Bollons noted: "With an increase in economic and insured assets in coastal areas due to population growth and increased affluence, damage from hurricanes and tropical storms is likely to continue."
The increase in hurricane activity in 2004 may be part of a longer-term trend. Aon cited research by William Gray, a meteorologist at Colorado State University, who has found that the cycle of increased activity could last another 10 or 20 years.
Hurricanes are fuelled by warm ocean waters; on average temperatures have been half a degree warmer than in the early 1990s.
The Atlantic warmed up between 1926 and 1960, when there was increased activity, but hurricanes reduced between 1960 and 1995, when the water was cooler.
http://www.guardian.co.uk/business/story/0,,1303927,00.html