NOAA has released its new report about what to expect this Fall. There is a 66% chance of La Niña developing during the September -November 2024 period, with the likelihood of it persisting through the winter. But what is La Nina, and what type of weather does it bring?
Have you ever noticed how sometimes the weather seems a bit unusual? It is colder than usual in the winter, or there are more storms than you expected. Sometimes, it can bring weird and unusual weather, although it seems like it has been strange for over a decade now, and the numbers back that up.
La Niña is a major weather event that occurs in the Pacific Ocean. It affects weather all over the world, including the United States. It is caused by changes in the ocean’s temperature and wind patterns.
Here is how it works:
– Usually, the Pacific Ocean has warm water on its surface, especially near the equator.
– During La Niña, this warm water is pushed farther west, and colder water from deep in the ocean rises to take its place.
– This colder water changes how the air moves, changing the weather patterns.
What Does La Niña Mean for the United States?
La Niña can cause some significant changes in the weather across the U.S. Here is what you might see:
1. Colder Winters in the North:
If you live in the northern part of the U.S., like the Midwest or the Northeast, you might notice that winters are colder and snowier during a La Niña year.
2. Warmer and Drier Weather in the South:
In the southern parts of the U.S., like Texas and Florida, La Niña can make the weather warmer and drier than usual. This can lead to droughts, so there is not enough rain for plants and crops to grow.
3. More Hurricanes:
La Niña can also make the Atlantic Ocean more active, leading to more hurricanes during the summer and fall. These storms can be scary, bringing heavy rain, intense winds, and flooding.
4. Stormy Weather in the Pacific Northwest:
Places like Washington and Oregon in the Pacific Northwest might see more rain and storms during La Niña, which can sometimes cause flooding.
La Niña is essential because it helps us understand why the weather differs from usual. For people living in areas that are affected by La Niña, knowing that it is coming can help them prepare for the weather changes. For example, farmers might need to plan for less rain, and people in the North might get ready for a colder winter.
For the insurance industry, La Niña signals a need for heightened preparedness. Insurers should be ready to manage an influx of storm damage claims, particularly in regions historically affected by La Niña conditions. This is also an opportunity for companies to educate policyholders about the importance of flood insurance and other coverages that can mitigate the fiscal impact of severe weather.
As we progress through 2024, it is becoming increasingly clear that climate change is not just an environmental issue; it is a financial one, too. For insurance companies and policyholders, understanding the latest climate data is essential to understand the risks that extreme weather events pose to properties, businesses, and lives. The latest NOAA Monthly Climate Call, covering data up to August 2024, sheds light on trends that should be top of mind for anyone in the insurance industry.
Record Breaking Temperatures are a Rising Threat to Property and Casualty Insurance
July 2024 shattered records, marking the warmest July globally since records began in 1850. The global land and ocean temperature surged by +1.21°C (+2.18°F), and land only temperatures spiked by an alarming +1.70°C (+3.06°F). These rising temperatures are not an anomaly but part of a concerning trend. The period from January to July 2024 is now the warmest on record, with a 77% chance that this year will go down as the hottest ever documented.
For insurance companies, this means an anticipated increase in claims related to extreme heat. Heatwaves can lead to infrastructure damage, wildfires, and even health related claims. Property and casualty insurers should brace for higher claim frequencies and associated costs. With the potential for record setting heat to become the norm, the industry must adapt by reassessing risk models and adjusting premiums accordingly.
Drought conditions have worsened across significant portions of the U.S., with 22.2% of the contiguous U.S. experiencing drought as of August 2024. Regions such as the Ohio Valley, the central and southern Plains, and the western U.S. have seen conditions intensify, setting the stage for another potentially catastrophic wildfire season.
The California Park Fire ignited on July 24, 2024, is a stark reminder of the dangers posed by these conditions. Burning over 429,263 acres, it ranks as the fourth largest fire in California’s history. It was driven by a deadly combination of dry conditions, declining vegetation health, and intense heat.
The implications for insurers are clear: wildfire risks are rising, and traditional risk assessments may no longer suffice. Policyholders in vulnerable areas should be encouraged to review and update their coverage, protecting them against these increasingly common and severe events. Insurers, on the other hand, must continue to refine their understanding of fire-prone regions and adjust their policies and premiums to reflect this growing risk.
The NOAA report also indicates a 66% chance of La Niña developing during the September-November 2024 period and a likelihood of it persisting through the winter. La Niña typically brings colder, wetter conditions to parts of the U.S., which can increase the risk of floods, storms, and other severe weather events.
There will be financial implications for the insurance industry.
As extreme weather events become more frequent and severe, the financial implications for the insurance industry are profound. The surge in claims related to heatwaves, droughts, wildfires, and storms could strain resources and challenge the sustainability of current models. Insurance companies may need to consider significant adjustments in premiums, policy terms, and reinsurance strategies to maintain financial stability in the face of these growing risks.
Policyholders, too, must be aware of the shifting landscape. As risks increase, so may the cost of coverage. Individuals and businesses must understand the value of comprehensive insurance policies that protect them against the escalating threats posed by climate change.
Given the data from NOAA, short term adjustments and long-term strategies are needed to navigate the evolving risks. Here are some actionable steps insurance companies can take:
1. Enhancing Risk Models: Incorporate the latest climate data into risk assessments to better predict and manage potential losses. This includes factoring in the increased likelihood of extreme temperatures, droughts, and storms.
2. Policy Adjustments: Update policy terms to reflect the increased risks associated with climate change. This might involve offering more specialized coverage for climate-related events or adjusting premiums for higher risks.
3. Stakeholder Communication: Maintain open lines of communication with policyholders, emphasizing the importance of understanding and mitigating climate risks. Educating clients about the importance of adequate coverage in the face of these new threats is not good practice—it is essential.
Staying informed and adapting to the realities of climate change will be critical for the insurance industry’s resilience.