North America Peril Advisory – Guy Carpenter Global Analytics & Advisory
December 2024
Key Takeaways
- The 2024 North Atlantic Hurricane season met hyperactive criteria, in reasonable agreement with aggressive predictions from seasonal outlook providers in 2024.
- While La Niña conditions failed to develop as advertised, sea-surface temperatures at near-historic levels and periods of record-low wind shear played a role in producing this historic season.
- 18 named storms formed in the North Atlantic, with 11 reaching hurricane strength. 5 of these reached major hurricane status. The season saw a period of unusual quiet straddling the traditional peak of hurricane season. However, this was followed by a historically active late-season.
- Several of these storms affected property-catastrophe interests. There were impactful landfalls in the Caribbean and Continental United States, with damage extending well into the interior, including portions of southeastern Canada. Most notably, Hurricanes Helene and Milton struck Florida in close succession, causing impacts across the southeast US.
- Insured losses to date continue to develop with variability from company to company. These insured losses are generally deemed manageable by reinsurers, in part due to increased catastrophe retentions over the last several years. Economic losses to date should well exceed USD 100 billion, according to preliminary estimates. Key contributors include catastrophic flood and crop impacts in the interior Carolinas, and serious flood impacts as far north as the Canadian Saint Lawrence Valley, escalating an already record insured-loss year for Canada.
2024 Basin Activity
The 2024 North Atlantic Hurricane season was driven by factors including:
- Especially warm sea-surface temperatures (record setting in some areas).
- Periods of record-low wind shear under cool ENSO-neutral conditions.
- Periods of elevated activity off the tropical African coast.
Seasonal outlook providers predicted one of the more active seasons on record, noting these factors. The season met hyperactive criteria and produced 11 hurricanes with 5 major (category-3+) hurricanes. This activity brought 5 hurricane landfalls in the Continental United States—since 1900, only 6 other seasons have seen 5 or 6 landfalls.
The season had an explosive start in June with Hurricane Beryl, which underwent rapid intensification to reach category-5 strength. Beryl is the earliest hurricane to reach category-5 strength in the observed record. August activity produced Hurricanes Debby (category-1) and Ernesto (category-2).
An unanticipated period of reduced activity from roughly August 20 to September 23 then was observed. This straddled the climatological peak of hurricane season from September 10-14 with unusually quiet conditions (but did include Hurricane Francine affecting the US Gulf Coast). The quiet stretch was influenced by a number of factors, as noted by Dr. Phil Klotzbach of Colorado State University (CSU). These considerations include:
- A northward displacement of African storm activity into an unfavorable region of the east Atlantic, with cooler waters, drier conditions and elevated wind shear.
- Warm temperatures at altitude in the eastern Atlantic, which helped stabilize the atmosphere and suppress hurricane development.
- A stabilizing period of a roughly 5-week cycle suppressing tropical development in portions of the Atlantic (called the Madden-Julian Oscillation).
The unusual quiet was broken by a remarkable period of late-season activity from roughly September 24 through the end of the season. The late-loaded season produced (according to CSU):
- 11 named storms after September 24, tying the 2005 record.
- 7 hurricanes after September 24, setting a new record.
- 4 major hurricanes after September 25, the second most on record, trailing only the 2020 hurricane season.
During this time, Hurricanes Helene and Milton made landfall in close succession with significant impacts in Florida.
Notable Landfalls Affecting Property Insurance Interests
Hurricane Beryl, the earliest category-5 hurricane on record in the Atlantic, caused widespread destruction across the Caribbean before making landfall as a category-1 hurricane in Texas on July 8. The islands of Grenada and Saint Vincent and Grenadines were particularly impacted, with near-total power outages and severe infrastructure damage. Beryl’s impacts in Texas included severe flooding, tornadoes and over 40 fatalities in the Houston area.
Hurricane Debby was classified as a category-1 hurricane before making landfall in the Florida Big Bend region on August 5. The storm caused heavy rainfall and strong winds, resulting in power outages and severe flooding. It also led to flooding as far north as New York, Vermont and the Canadian Saint Lawrence Valley. Montreal experienced its rainiest day ever recorded, and estimated insured losses of CAD 2.5 billion make it the costliest weather event in Quebec history (according to Catastrophe Indices and Quantification Inc.).
Hurricane Ernesto crossed Bermuda as a category-2 hurricane in mid-August. Prior to affecting Bermuda, the storm crossed the Leeward Islands and US and British Virgin Islands as a tropical storm, with close approach to Puerto Rico. Hazards of concern included significant flooding due to excessive rainfall, storm surge and variable property damage due to category-2 hurricane conditions in Bermuda.
Hurricane Francine made landfall on September 11 as a category-2 hurricane near Morgan City, Louisiana, with maximum sustained winds of 100 mph. Francine was responsible for power outages and structural damage from storm surge, flooding and strong winds across southeastern Louisiana, Mississippi and Alabama. After landfall, Francine weakened to a tropical depression but continued to bring rainfall and tornadoes to the southeastern US.
Hurricane Helene made landfall on September 26 near Perry, Florida, as a category-4 hurricane and was notable for damaging winds and heavy rainfall. The most powerful hurricane to hit the Big Bend region, it brought an estimated storm surge of 15-20 feet.
A forward speed of 24 mph at landfall allowed Helene to carve a path well inland through Georgia and the Carolinas. Additionally, Helene caused flooding in areas not typically considered at risk for hurricane flooding, with extensive property damage and economic losses, and catastrophic effects in portions of the western Carolinas.
In Asheville, North Carolina, more than 14 inches of rain fell, causing the Swannanoa River to reach unprecedented flood levels, triggering landslides and cutting off road access to the city. Surrounding areas saw estimated rainfall amounts near 30 inches, as Helene interacted with a nearby frontal system to the north. The storm’s aftermath continues to challenge the community as it works toward recovery. This was the third hurricane to affect the Florida Big Bend region over the last 2 years. Hurricane Helene also produced 225 fatalities, making it the third-deadliest hurricane to affect the United States since Maria (2017) and Katrina (2005), according to statements from NOAA/NCEI.
Hurricane Milton rapidly intensified into a category-5 hurricane in the Gulf of Mexico before making landfall as a category-3 storm near Siesta Key, Florida, on October 9. Milton was weakening at landfall, with degrading structure and an open eyewall on the southwest side. Nevertheless, the storm caused widespread power outages and flooding across portions of the Florida peninsula in densely populated areas. A significant tornado outbreak also caused significant property and infrastructure damage far from the landfall point. The hurricane compounded effects from Helene just a few weeks earlier and further strained recovery efforts.
Industry Implications
The industry claims picture continues to develop, with variable experience among insurance companies. Reinsurers generally believe that the 2024 hurricane season will continue to be manageable, as the majority of losses were retained by primary insurers. Seasons with 10 or more hurricanes have produced insured losses ranging widely from under USD 2 billion (2010) to well over USD 100 billion (2005 and 2017). Not all active hurricane seasons produce insured losses as experienced in 2005 and 2017, and seasonal activity alone is only a loose predictor of insured loss directionality.
Factors in play for 2024 insured losses are numerous and include:
- Landfall location, strength and forward speed.
- Affected population and industry exposure.
- Hazards in play including wind, storm surge and flood.
- Affected infrastructure and local ability to recover.
- Social inflation including litigation.
- Legislative developments in recent years in the state of Florida.
For Hurricanes Helene and Milton, claims development progressed somewhat slowly. In the state of Florida, a substantial number of claims have been closed without payment, for reasons including unmet deductible, flood damage claimed on wind-only policies, or to meet conditions for FEMA assistance. Hurricanes Debby and Helene in particular rendered significant to catastrophic flood impacts in the interior, with damage extending into New England and the Canadian Saint Lawrence Valley.
Impacts to the National Flood Insurance Program are a matter of public record and also illustrate the challenges with flood insurance penetration in areas away from the immediate coast and especially the interior—a significant protection gap. The fast- forward motion and excessive rainfall of Hurricane Helene also amplified treefall damage well into the interior, which likely amplified insured losses in the state of Georgia, affecting crops, property and infrastructure. It is also notable from recent landfalls that the resilient Florida Building Codes continue to serve their purpose for mitigating wind impacts.
Despite the potential for a high level of industry catastrophe loss from these events, there is ample reinsurance capacity to meet the industry’s increasing demand. In fact, dedicated reinsurance capital is expected to increase by about 10% this cycle. Above-average reinsurer profit margins in recent years are driving increased competition as reinsurers vie for additional business.