NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) releases a research report, Atlantic Hurricane Season Forecast Reduced, Reinsurance Rates Remain Low, as two of the leading hurricane forecasters reduced their outlooks for the 2018 Atlantic hurricane season. The revised forecast from Colorado State University (CSU) now calls for below average activity. AccuWeather also reduced its forecast, remaining more in-line with historical averages.
The forecast prepared by CSU, one of the leaders and pioneers of hurricane forecasting, estimates 11 named storms, including four hurricanes – of which, only one will be a major hurricane. The Atlantic hurricane season started on June 1 and runs through November 30. CSU noted, “The tropical and subtropical Atlantic is currently much colder than normal, and the odds of a weak El Niño developing in the next several months have increased. With the decrease in our forecast, the probability for major hurricanes making landfall along the United States coastline and in the Caribbean, has decreased as well.” In an email to KBRA, Dr. Phil Klotzbach, a research scientist in the Department of Atmospheric Science at CSU and author of CSU’s hurricane forecast reports clarified, “Atlantic sea surface temperatures and El Niño conditions are mostly unrelated. Both of these conditions currently point towards a less active Atlantic Hurricane Season.”
In addition, following the costliest Atlantic Hurricane Season, it was widely accepted that reinsurance pricing would increase, but to what degree was widely debated. Now that the 2018 catastrophe reinsurance renewals have been inked, the consensus is disappointment for reinsurers, but ample supply and reasonable costs for primary writers. KBRA believes the growing availability of alternative capital is largely responsible for a change in the reinsurance market, as pricing has not increased to the predicted extent. KBRA expects 2018 issuance to exceed $10 billion for only the second time and may approach or exceed last year’s record issuance. Many observers agree this will continue, as it is expected there will be a greater need for more insurance due to climate change and the coverage protection gap for flood risk.
To view the report, please click here.
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KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.