Environmental signals in property damage losses from hurricanes

We demonstrate the existence of environmental signals in property damage losses from hurricanes affecting the United States. The methodology is based on a random sums model, where the number of damaging hurricane events is modeled separately from the amount of damage per event.

It is shown that when the springtime north-south surface pressure gradient over the North Atlantic is weaker than normal, the Atlantic ocean is warmer than normal, there is no El Ni˜no event, and sunspots are few, the probability of at least one loss event increases. However, given at least one loss, the magnitude of the damage per year is correlated only to ocean temperatures in the Atlantic. The magnitude of damage losses for a return period of 50 years is largest under a scenario featuring a warm Atlantic Ocean, a weak North Atlantic surface pressure gradient, El Ni˜no, and few sunspots.