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WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President & Meteorologist IMUA Annual Meeting, Lansdowne Resort, Leesburg VA

Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

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Page 1: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

WEATHER & CLIMATEVOLATILITY OR CHANGE IN THE AIR?MAY 21, 2019

Joshua Darr, MS CCRA

Chicago

Senior Vice President & Meteorologist

IMUA Annual Meeting, Lansdowne Resort, Leesburg VA

Page 2: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Volatility or Change in the Air?Agenda

1

What are the latest scientific views on changing weather patterns?

How does the changing weather patterns impact the frequency and severity of North American catastrophe events?

What lessons have been learned? What can we do about the future?

Page 3: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Weather VolatilityWhy is it Important to Stay in Tune with the Latest Science?

2

Source: 2018 World Economic Forum Global Risks Report

Increasing acknowledgement by many policy groups that we are witnessing an

increase in cat events and extreme weather globally

Page 4: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Global Insured Catastrophe Losses1970 - 2018

3

Source: Guy Carpenter, Swiss Re, includes NFIP insured losses

Page 5: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

4

Page 6: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air? 5

Global Temperatures Since 1980Natural Cycles being Disrupted? The Disputed Pause of the 2000s

Source: NASA GISS

Baseline temperatures: 1951-1980

Year

Glo

bal

Te

mp

era

ture

An

om

aly

Global Ocean-Land Surface Temperature (C)

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

0.8

1

1.2

Annual Mean 5 Year Running Average

Page 7: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

The 2016 Mega El NiñoRecord Intensity

6

Page 8: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

El Niño Events Naturally Warm the GlobeWarmth Released from Ocean to Atmosphere

7

Page 9: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Comparing Most Recent Mega El Niño Events

8

Meaningful Shift in Region of most Prominent Warming

El Niño events

tend to propel

natural warming of

the globe

Most of the mega

2016

El Niño warming

was focused in the

Arctic

Winter

temperatures were

8-15C (15-28F)

warmer than

average

Page 10: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

The Acceleration of Arctic Sea Ice LossOutsized Impact on Temperatures as Ice Shifts to Open Waters

• Impact on arctic temperatures due to more ocean

9

Page 11: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Less Ice = Dramatic Warming Across the Arctic

10

Autumn Arctic Temperatures since 1950

Page 12: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air? 11

The Jet StreamMeasuring the Strength of Temperature Contrast

NASA

Video link

Page 13: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Tale of Two Springs!Comparing April 2017 to April 2018

12

Page 14: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air? 13

Current Climate Change UnderstandingStacking Weather Perils Side by Side

• Is there a way to link a

changing climate to any

individual catastrophe peril

event?

• Science evolving rapidly in

this field

• Highest confidence in link to

precipitation events

• Least confidence in

thunderstorm and winter

events

2014 National Academy of SciencesClimate Change: Evidence & Causes

Page 15: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Page 16: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Extreme Rainfall EventsA Double Whammy: More Frequent and Severe

15

Extreme One-Day Precipitation Events in the Contiguous 48 States (NOAA)

Change in amount of precipitation falling in heaviest 1% of all daily events

(NCDC / Climate Central)

2016 featured 19 separate floods the US, the most since records began in 18802017 continued the deluge with Hurricane Harvey in Houston; 2018 brought Lane to Hawaii, Florence to Carolinas, record setting Mid-Atlantic2019 off to fast start with record floods in Nebraska and Iowa

Page 17: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Atmospheric RiversThe Moisture Freeway from the Tropics to Mid-latitudes

16

As the atmosphere warms, the ability to transport higher amounts of moisture from the

tropics to the mid-latitudes increases roughly 7% for 1 degree C.

• Narrow, moisture laden corridors in the atmosphere

• A ‘freeway’ of moisture rich air that connects the tropics to the mid-latitudes

• Advances in satellite technology over the past 20 years have brought AR detection from research to operations

Page 18: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Major Increase in Crippling US Snowstorms in Recent YearsCounterintuitive to Warming Climate? Not Expected 20 Years Ago.

17

0

2

4

6

8

10

12

14

1940 1960 1980 2000 2020

Northeast Snow Impact Scale

11

6

6

5

7

27

0 10 20 30

1959-1968

1969-1978

1979-1988

1989-1998

1999-2008

2009-2018

NESIS Events by Decade

Page 19: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

The March and April 2019 “Superbombs”Frequency and Severity due to Persistent Jet Steam Patterns

18

Page 20: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Massive Snowpack Melt & Heavy Rain Unprecedented Flooding

19

Page 21: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Winds in Excess of 100 mph Gusts26 Car Trail Derailment in New Mexico

20

Page 22: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?21

Page 23: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Wildfire: Are we Witnessing a New Normal?Record Setting Loss Years of 2017 & 2018

21

- 5,000 10,000 15,000 20,000

Insu

red

Lo

ss

# Structure Damaged/Destroyed

California Wildfires Loss vs. Structures Damaged/Destroyed

Tubbs

2017

Atlas

2017 Oakland

Hills 1991

Thomas

2017

Carr

2018

Camp

2018

Woolsey

2018

Page 24: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Wildfire: Plethora of Factors at PlayShorter Wet Season across Western U.S.

22

1) Later onset, earlier end to winter wet season

Page 25: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Wildfire: Plethora of Factors at PlayAnomalous Heat in Recent Years

23

2) Earlier onset of spring heat, persisting through summer

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

JanFebMarApr

MayJunJul

AugSepOctNovDec

Page 26: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Timeline of a DisasterPrior Conditions, Forest Health & Management

24

129 million dead trees in Sierra Nevada

Page 27: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Timeline of a DisasterMeaningful Increase in Tree Mortality

25

Page 28: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Wildfire: Plethora of Factors at PlayA Wet Winter is not Necessarily a Good Thing

26

Source: NOAA, Jan 2017 precip anomaly

Page 29: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

What lessons have we learned? What can we do about the future?

Page 30: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Increasing Company StrengthLeveraging Analytics to Make Objective Assessment

28

Outsized loss to expectations

Risk differentiation

Risk mitigation & InsurtechLeveraging cat experience to

propel financial stability via analytical solutions

Efficient claims response

Page 31: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Early Entry to Insurtech WorldCommercial Catastrophe Models

29

Page 32: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Risk DifferentiationObjective Analytics Driven by Insurtech Solutions

30

In addition to all exposure and cat model solutions, a host of companies and

insurance providers can provide hazard risk scores for a whole host of perils

Page 33: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Outsized Loss to ExpectationsExtreme Power Outages more Prevalent

31

Million customer-hours impacted; largest blackouts in US history

483

515

568

592

681

683

700

753

775

850

1,050

3,228

- 500 1,000 1,500 2,000 2,500 3,000 3,500

Irene (2011)

Wilma (2005)

Florence (2018)

Northeast Blackout (2003)

Katrina (2005)

Ike (2008)

Hugo (1989)

Irma (2017)

Sandy (2012)

Michael (2018)

Georges (1998)

Maria (2017)

Millions of hours of customer power outages

US Total 2012-2016

3,400M hours

Page 34: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Better Technology to Manage Supply Chain RiskRiskpulse Sunrise Platform

32

Transportation and logistics suffer greatly due to poorly managed supply and demand risks which lead to lost sales, broken promises to customers, damaged

products and excessive freight costs

Page 35: Weather & Climate: Volatility or Change in the Air? Annual Meeting/T4.A...WEATHER & CLIMATE VOLATILITY OR CHANGE IN THE AIR? MAY 21, 2019 Joshua Darr, MS CCRA Chicago Senior Vice President

© 2019 Guy Carpenter & Company, LLC Weather & Climate: Volatility or Change in the Air?

Man made or natural climate variability?

Weather & Climate PatternsIncreasing Volatility or Fundamental Changes?

33

Is the weather getting worse?

• No. However, it’s getting more

volatile

Why is weather getting more volatile?

• Warmer Arctic as well as mid-latitudes

linked to stickier weather patterns, causing

longer regimes with embedded extremes

Can we say anything about the future?

• Arctic ice loss expected to continue, no

sign of going back to historical normals

What can be done to manage the volatility?

• Insurance protection, real time monitoring

& catastrophe modeling, resiliency efforts 0

5

10

15

20

25

30

35

40

45

50

1910

1920

19

30

1940

1950

1960

1970

1980

1990

2000

20

10

% L

ow

er

48 U

nd

er

Extr

em

e C

on

dit

ion

s

US Climate Extremes Index

CEI 5 per. Mov. Avg. (CEI)