Usage of seasonal forecasts in Tropical Cyclone risk models

Tropical cyclones (TCs) pose significant risks to lives, infrastructure and economies, especially in coastal areas.

AXA has been developing stochastic natural hazard models (also called natural catastrophe or NatCat models) to quantify the impact of events such as TCs on its portfolios. However, NatCat models tend to model the average annual risk for a given peril. NatCat models do not consider the present state of the atmosphere and therefore are not conditioned with respect to the current tropical cyclone season.

Information about the TC risk in the upcoming weeks or months of a season could be crucial for an insurer, especially regarding its reinsurance coverage, but also for better risk mitigation through reinforced and more efficient prevention systems.

Previous studies have demonstrated that ensemble seasonal forecasts have skill in predicting TC occurrence several weeks in advance. We explore the ability of ensemble seasonal forecasts to provided skilled information on the general activity of the season to come for various lead-times (number of occurrences, number of landfalls, ACE…) and how can NatCat models be adapted to provide a more dynamic vision of the TC risk.