Reuters Investigates

Unpredictable weather is making life difficult for insurers — see today’s special report: ”Extreme weather batters the insurance industry.”

By Ben Berkowitz

Every year forecasters at Colorado State University take their most educated guess as to how the next year’s hurricane season will unfold. It always draws headlines, but as history shows, that initial “best guess” is usually somewhat far off the mark.

An analysis of 10 years of first forecasts for the subsequent June-November storm season shows the number of tropical storms generally exceeds expectations, sometimes by a fair bit. As you go up the scale to full-blown hurricanes and on to the more intense “major hurricanes,” the disconnect remains the same.

In 2006, for example, the number of major hurricanes matched the predicted number of all hurricanes, period. In 2010 the number of hurricanes was greater than the expected incidence of all tropical storms. (In fact 2010 is considered by experts to have been a relatively heavy storm year, despite the fact none actually made a crucial U.S. landfall).

Though the predictions have a mixed track record, they serve a useful planning purpose. If insurers, governments and coast-dwellers have a reasonable guess as to what a storm season is going to look like generally, they can plan ahead. In hurricane country, planning ahead is often the only thing that separates inconvenience from disaster.

To read the special report in multimedia PDF format, click here.