This document discusses the risks of winter storms to U.S. and Canadian portfolios. It notes that recent winters in 2013-2014 and 2014-2015 caused billions in insured losses due to numerous snow and cold temperature records. Freezing temperatures, snow, ice, and wind are the major perils. Climate change may impact winter storm risk by weakening jet streams and increasing volatility in cold air outbreaks. Key questions remain around accurately assessing this risk and potential impacts of a changing climate.
Boston’s New Big Dig: How does U.S. winter storm risk impact your portfolio?
1. BOSTON’S NEW BIG DIG: HOW
DOES U.S. WINTER STORM RISK
IMPACT YOUR PORTFOLIO
Robert Muir-Wood, Chief Research Officer
Matt Nielsen, Senior Director, Global Governmental and Regulatory Affairs
Jeff Waters, Manager, Model Product Strategy
Lloyd Dixon. His expertise includes insurance, compensation, and liability issues. He has also been lead investigator of a number of studies addressing environmental and natural resource issues. Recent studies include analysis of the wind and flood insurance markets, asbestos litigation, the California workers' compensation insurance market, and the contribution of hedge funds to systemic financial risk. Dixon received his B.S. in general engineering and B.A. in political science from Stanford University and his Ph.D. in economics from the University of California, Berkeley.
Dr. Gordon Woo is the chief architect of the RMS terrorism risk model. For his development efforts on the model he was named one of the 100 most influential people in finance by Treasury & Risk magazine. He is a regular lecturer on terrorism risk at the NATO Center of Excellence for the Defense against Terrorism in Ankara, Turkey. In September 2013, he testified before Congress on the applications of terrorism risk modeling. Dr. Woo is the author of the book, 'Calculating Catastrophe', which was published for the 10th anniversary of 9/11.
2014
Not nearly as many records broken – not unusual from a severity standpoint
What was unusual was the persistence of below normal and well-below temperatures during this period
February 2015
23 states had top 10 coldest Februaries
Coldest Feb. on record for Buffalo, Cleveland and Chicago
Snowiest month on record for Boston (64.8”)
2015
Boston breaks the all-time snowfall record of XXXX, receiving over 118” of snow
It’s all relative though
Globally, the only record cold temperature anomaly was centered over the great lakes
Although most of the eastern N. America experienced below average, must of the globe experienced temps that were near or above average from Dec. 2013 – Feb. 2014
8th warmest global temp on record
Damages
Wind, roof collapse due to snow/ice, frozen pipes, flooding from snowmelt, auto damages due to fallen trees, BI
December 2013-March 2014
Ridging near the west coast of North America leading to a deep trough from Northern Canada into the central and eastern states
Allowed for arctic air to be transported south into the central and eastern U.S., particularly in the northern parts of the midwest/great plains (MI, MN, WI, ND)
Ridge was deepest over Ontario and the Upper Great Lakes
ENSO
Neutral ENSO conditions make parts of the eastern U.S. more susceptible to high-latitude blocking. Caused by ridging over greenland (-NAO) or similar blocking along the west coast of north America (+PNA)
Separated from warm air via the polar jet stream
Its location and movement depends on strength of winds and jet stream
December 2013-March 2014
Ridging near the west coast of North America leading to a deep trough from Northern Canada into the central and eastern states
Allowed for arctic air to be transported south into the central and eastern U.S., particularly in the northern parts of the midwest/great plains (MI, MN, WI, ND)
Ridge was deepest over Ontario and the Upper Great Lakes
ENSO
Neutral ENSO conditions make parts of the eastern U.S. more susceptible to high-latitude blocking. Caused by ridging over greenland (-NAO) or similar blocking along the west coast of north America (+PNA)
The black line shows the running 5-year average since 1983
Were winters more extreme then? Or is the industry better prepared?
While not listed here, the 1998 Ice Storm caused over $3 BN in loss to Canada
US ILC RPs
1983 Freeze – 57
1993 SotC – 22
1985 Freeze – 10
1989 Freeze – 9
1994 Winterstorm – 9
1992 Nor’easter – 8
1996 Ohio Valley – 5
2014 Polar Vortex – 5