Oxford/Exeter, When Storm Isha hit Northern Ireland and northern Britain in January 2024, wind gusts of nearly 100 mph caused widespread property damage. This strong extratropical cyclone also affected both the insurance and energy sectors. Isha resulted in losses that required the insurance industry to pay out approximately 500 million euros (427 million pounds).
This is a significant financial impact, yet significantly smaller than some previous extreme weather events, such as Hurricane Lothar which affected several large areas of Europe with losses amounting to around 10 billion euros.
Storm Isha also had an impact on the energy sector. Fallen trees and high winds caused downed power lines, leaving hundreds of thousands of homes without power.Some energy traders benefited as higher wind speeds led to record-breaking wind power production and significant declines in energy prices. At the peak of the storm more than 70% of Britain's electricity came from wind turbines, compared to an average of 30%. Energy systems are being overwhelmed by the windstorm and heatwave due to gas shortages and rising prices caused by the war in Ukraine .
Extreme weather events cause widespread economic damage, of which more than US$10 billion (80 billion pounds) will be covered by insurance in 2023, so understanding these extreme conditions is of great social and economic interest. But the impact of extreme weather varies depending on the industry.An event that benefits the energy sector may be detrimental to the insurance industry, and vice versa.
Climate change is likely to intensify these extreme weather events, potentially increasing or altering their impacts on the energy and insurance sectors. With greater frequency of heatwaves, pressure on energy systems will potentially increase. Stronger storms can mean more damage and potentially higher premiums from the insurance industry. So it is important that I understand the meaning of extreme in each context – this can help researchers like us and society as a whole to predict events and understand the harm.Focusing on the insurance sector, extreme weather events are of interest because they are likely to cause destruction and damage that needs to be covered financially. Hurricanes and severe tropical cyclones are of most interest due to wind damage and flooding. From 2018 to 2022, these events caused economic losses of more than US$450 billion, less than half of which was insured. The costliest event in the last 50 years was Hurricane Katrina which devastated New Orleans in the US in 2005, resulting in insured losses of approximately US$100 billion.
The insurance industry categorizes events with the potential for loss into primary and secondary perils.Primary hazards, including hurricanes, typhoons and earthquakes, have the potential to cause the most damage. Secondary hazards, such as wildfire or hailstorm, occur more frequently and cause low to moderate damage.
For primary perils, such as European hurricanes, it is easy to assume that more events occurring result in higher insured losses. But only the strongest events are of interest, because they cause the most extensive damage. For example, the recent 2023–2024 winter season saw a large number of storms hit Western Europe, but only one caused significant damage – Storm Ciaran from 1 and 2 November 2023, which hit France, Belgium, the Netherlands and the UK. Affected, resulting in approximately 2 billion euros in insured losses.Despite little impact on insurance, that winter season had a huge impact on the agricultural sector, with widespread and frequent flooding affecting agricultural land and ruining crops.
Another factor for insurers to consider is the area affected and economic risk. The storm's strong wind gusts and heavy rainfall have little impact on the Gulf of Mexico or even less populated parts of the U.S. coastline. But a hurricane impacting a built-up metropolitan area (as Hurricane Katrina did for New Orleans) will cause massive damage and loss of life.
Insurance companies evaluating risks must take into account the combination of the most extreme weather systems and those affecting built-up, developed areas.Risk-prone areas are quantified by examining historical events and assessing other possible scenarios generated by the model. Risk experts also consider what impact historical events will have today. Increases in risk may be due to increases in population, density of the built environment, or GDP. For example, if Hurricane Katrina were to hit today, its impact would be US$40 billion greater. A variety of extreme weather, from dust storms to heavy snowfall, can adversely impact energy infrastructure, production, and demand.Storms or floods can damage power lines or substations that distribute electricity to homes and businesses. In October 2023, Storm Babette left more than 100,00 people without power in northern England.
Extreme weather also affects the amount of renewable electricity generated by wind, solar and hydropower. Wind drought – periods of low wind – are of particular concern. A prolonged wind drought from April to September 2002 affected the UK, Ireland and other parts of Western Europe, with wind speeds about 15% below average.This means that more gas must be burned to produce enough electricity to meet demand. Met Office researchers recently calculated that there is a one in 40 chance of low wind speeds (and low power output) for three consecutive weeks in any given winter.
Extreme weather affects energy demand. Temperature affects the amount of heating and cooling demand, but wind speed, direction and precipitation also play a role. According to researchers in Spain, southern European heatwaves are associated with an increase of up to 10% in energy demand, mostly due to air conditioning.These influences often overlap. Researchers across Europe showed that droughts are especially an issue if they coincide with extreme temperatures (which lead to higher energy demands for heating or cooling). The impacts of extreme weather are further complicated by society's move toward weather-dependent energy systems and the changing distribution of extremes in a warming climate.
As our understanding of how extreme weather impacts these two regions increases, it is essential that weather and climate information is tailored to professionals and researchers in each region, so that it can help reduce future losses and long-term impacts. Could help.(talk) hand
Hand
This is a significant financial impact, yet significantly smaller than some previous extreme weather events, such as Hurricane Lothar which affected several large areas of Europe with losses amounting to around 10 billion euros.
Storm Isha also had an impact on the energy sector. Fallen trees and high winds caused downed power lines, leaving hundreds of thousands of homes without power.Some energy traders benefited as higher wind speeds led to record-breaking wind power production and significant declines in energy prices. At the peak of the storm more than 70% of Britain's electricity came from wind turbines, compared to an average of 30%. Energy systems are being overwhelmed by the windstorm and heatwave due to gas shortages and rising prices caused by the war in Ukraine .
Extreme weather events cause widespread economic damage, of which more than US$10 billion (80 billion pounds) will be covered by insurance in 2023, so understanding these extreme conditions is of great social and economic interest. But the impact of extreme weather varies depending on the industry.An event that benefits the energy sector may be detrimental to the insurance industry, and vice versa.
Climate change is likely to intensify these extreme weather events, potentially increasing or altering their impacts on the energy and insurance sectors. With greater frequency of heatwaves, pressure on energy systems will potentially increase. Stronger storms can mean more damage and potentially higher premiums from the insurance industry. So it is important that I understand the meaning of extreme in each context – this can help researchers like us and society as a whole to predict events and understand the harm.Focusing on the insurance sector, extreme weather events are of interest because they are likely to cause destruction and damage that needs to be covered financially. Hurricanes and severe tropical cyclones are of most interest due to wind damage and flooding. From 2018 to 2022, these events caused economic losses of more than US$450 billion, less than half of which was insured. The costliest event in the last 50 years was Hurricane Katrina which devastated New Orleans in the US in 2005, resulting in insured losses of approximately US$100 billion.
The insurance industry categorizes events with the potential for loss into primary and secondary perils.Primary hazards, including hurricanes, typhoons and earthquakes, have the potential to cause the most damage. Secondary hazards, such as wildfire or hailstorm, occur more frequently and cause low to moderate damage.
For primary perils, such as European hurricanes, it is easy to assume that more events occurring result in higher insured losses. But only the strongest events are of interest, because they cause the most extensive damage. For example, the recent 2023–2024 winter season saw a large number of storms hit Western Europe, but only one caused significant damage – Storm Ciaran from 1 and 2 November 2023, which hit France, Belgium, the Netherlands and the UK. Affected, resulting in approximately 2 billion euros in insured losses.Despite little impact on insurance, that winter season had a huge impact on the agricultural sector, with widespread and frequent flooding affecting agricultural land and ruining crops.
Another factor for insurers to consider is the area affected and economic risk. The storm's strong wind gusts and heavy rainfall have little impact on the Gulf of Mexico or even less populated parts of the U.S. coastline. But a hurricane impacting a built-up metropolitan area (as Hurricane Katrina did for New Orleans) will cause massive damage and loss of life.
Insurance companies evaluating risks must take into account the combination of the most extreme weather systems and those affecting built-up, developed areas.Risk-prone areas are quantified by examining historical events and assessing other possible scenarios generated by the model. Risk experts also consider what impact historical events will have today. Increases in risk may be due to increases in population, density of the built environment, or GDP. For example, if Hurricane Katrina were to hit today, its impact would be US$40 billion greater. A variety of extreme weather, from dust storms to heavy snowfall, can adversely impact energy infrastructure, production, and demand.Storms or floods can damage power lines or substations that distribute electricity to homes and businesses. In October 2023, Storm Babette left more than 100,00 people without power in northern England.
Extreme weather also affects the amount of renewable electricity generated by wind, solar and hydropower. Wind drought – periods of low wind – are of particular concern. A prolonged wind drought from April to September 2002 affected the UK, Ireland and other parts of Western Europe, with wind speeds about 15% below average.This means that more gas must be burned to produce enough electricity to meet demand. Met Office researchers recently calculated that there is a one in 40 chance of low wind speeds (and low power output) for three consecutive weeks in any given winter.
Extreme weather affects energy demand. Temperature affects the amount of heating and cooling demand, but wind speed, direction and precipitation also play a role. According to researchers in Spain, southern European heatwaves are associated with an increase of up to 10% in energy demand, mostly due to air conditioning.These influences often overlap. Researchers across Europe showed that droughts are especially an issue if they coincide with extreme temperatures (which lead to higher energy demands for heating or cooling). The impacts of extreme weather are further complicated by society's move toward weather-dependent energy systems and the changing distribution of extremes in a warming climate.
As our understanding of how extreme weather impacts these two regions increases, it is essential that weather and climate information is tailored to professionals and researchers in each region, so that it can help reduce future losses and long-term impacts. Could help.(talk) hand
Hand
