The 2006 U.S. hurricane season had less than $250 million in reported insured losses. Of course, this decade has already set records for both storm activity and catastrophe losses, and we consider 2006 in that context. Holborn believes that the increases in insured hurricane losses are primarily due to the increasing density and values of insured properties in exposed areas, and to a lesser degree, natural cycles in the environment. The climate is warming, but its effect on the amount of losses is currently much less than these other factors.

Even considering all of these items, random and unknown factors are the dominant influence in the year-to-year variations in the number of storms, their landfalls and the amount of insured losses. Recognizing that annual losses will vary widely, we expected that 2007 and the remainder of the decade will typically incur losses that are higher than in the 2006 season and the 1993 - 2003 period, although not necessarily as high as seen in 2004 or 2005. The reinsurance industry is well prepared today to respond to the increased level of expected and foreseeable losses.

Contents

A. 2006 Season Summary

B. Trends in Hurricane Frequency

C. Other Factors in Insured U.S. Hurricane Losses

D. Holborn's Conclusions

E. Supporting Data

F. For More Information

A. 2006 Season Summary

There were no hurricane-strength U.S. landfalls in 2006 and total storm activity was moderately below long-term averages. There were nine named storms during the season, only five of which reached hurricane status. Ernesto was the only one (of the five hurricanes) to make landfall in the U.S., hitting the Florida Keys as a strong tropical storm in the waning days of August. Most storms stayed far to the east of the mainland. Two of the five hurricanes were classified at any time as "major," or Category three or greater on the Saffir Simpson scale.

Tracks for 2006 Atlantic and Gulf Storms

2006 came as a surprise to meteorologists such as Dr. Kerry Emanuel of MIT and Dr. Bill Gray at Colorado State University. In April, 2006, the Colorado State team had forecast:

Tropical Activity: 2004 through 2006, by Date

Early in the season, water temperatures were above average, especially off the New England coast. However, by July, conditions were closer to normal levels. Water temperatures have been below 80 degrees Fahrenheit since mid-November along the entire U.S. Atlantic and Gulf coastlines, not supporting any late season storm development.

Atlantic and Eastern Pacific storm activity tends to move in opposite directions, and there were 18 named storms in the Eastern Pacific this season, significantly higher than normal.

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