JOSH DARR – Senior Vice President and Lead Meteorologist, JLT Re, Chicago, IL
On first glance, media outlets would have you believe that the Eastern U.S. is in a period of increased snowstorms and temperature volatility during the winter. Over recent years, terms such as “Superbombs,” “the Polar Vortex” and names associated with winter storms are now commonplace in the public vernacular of these events. The media has validity in their assessment of increasingly severe winter weather, as witnessed again early in 2018. Why is this happening? What are implications for insured losses and what does it mean for the future management of winter storm risk?
Figure 1: The January 4, 2018, Superbomb. (Source: RAMMB/CIRA/NOAA)
Revisiting the Volatile Winter of 2018
The Arctic Outbreak and Superbomb of New Year’s 2018: Winter weather in 2018 started off quickly as the Arctic greeted Eastern Canada, the Great Lakes and the Eastern Seaboard. Extreme cold in this region surged out of the Arctic and resulted in the coldest late December/ early January period on record. The Arctic air, eventually reaching the Atlantic Ocean, created an exceptionally strong gradient in temperature. Ocean temperatures in the Western Atlantic were running well above average for early January. Strong differences in temperature set the ideal stage for storm formation, with the “Superbomb of 2018” forming in the first week of January. Meteorologically defined as an extratropical low pressure system, intensifying more than 24 millibars in 24 hours, this storm more than doubled the threshold while intensifying by 59 millibars in 24 hours. While winds in excess of 90 miles per hour stayed just offshore the U.S., the event brought freezing rain to coastal areas of the Southeast U.S. and record setting snowfall in coastal areas of Virginia and Maryland, and one to two feet of snow across the Northeast U.S. and Canada. Boston, MA recorded the highest storm surge on record of 4.88 feet, barely exceeding the prior record held of 4.82 feet during the infamous Blizzard of 1978.
The March Snowstorm Parade: After a respite in severe cold and storminess in late January and February, the jet stream pattern once again moved into a favorable position for Eastern U.S. winter storm formation in the first two weeks of March. Three intense, low pressure systems formed within the span of 12 days, with a fourth forming 10 days later, each bringing a flavor of severe weather that caused an increase in property insurance claims. Across the four events:
- Hurricane-force wind gusts in excess of 74 miles per hour were recorded from the metro Washington D.C. area through the coast of Northern New England.
- Storm surge recorded top five levels at multiple tidal gauges in the Northeast U.S., including once again Boston, ranking third highest of all time.
- Power outages impacted millions of customers, partially the result of heavy winds.
- Heavy snowfall, in excess of one foot, across many portions of the Interstate 95 megalopolis.
Winter Storm Insured Losses, a Confluence of Conditions
The peril of winter storm and resulting losses to the insurance sector deal with a confluence of several factors acting in concert: severe cold, heavy snow load, and/or ice dams due to snow buildup on roofs are the leading causes of loss. With the exception of severe Arctic cold, snow is a meaningful factor in insured losses. As most winter insured losses taking place in the heavily populated Eastern U.S., JLT Re has created an index to analyze 2018 in the context of all major snowstorms dating back to 1950, leveraging the Northeast Snow Index Scale (NESIS) from The National Oceanic and Atmospheric Administration (NOAA). Incorporating heavy snowfall in excess of 10 inches, the geographic extent of heavy snowfall and the population in the path of the storm, this index measures the societal impact of major historical snowstorms. In 2018, five events were recorded (one in January, four in March), tying 2014 for the highest number of NESIS events in one winter. Furthermore, nearly half of all major snow events since 1950 have transpired in the last decade, as can be seen in the charts below.
Figure 2: The Northeast U.S. Snow Impact Scale (NESIS) assesses regions of heavy snowfall (in excess of 10 inches), the regional extent of heavy snowfall, and the population in the path of snowfall to determine societal impact; 29 out of the 64 most impactful snowstorms in the U.S. since 1950 have transpired in the past dating back to 1950, leveraging the Northeast decade, with four events recorded in the winter of 2018. (Source: NOAA/ NCEI)
Will the Increase in Frequency of Major Snow Storms Continue?
At the simplest of explanations, the clash between cold and warm air masses provides lift that is necessary for extra tropical storm systems to form and intensify. In the heart of winter, cold air pouring south out of the Arctic into Central and Eastern North America will eventually flow to the Gulf of Mexico or Atlantic coastline. Meanwhile, the Atlantic is significantly warmer than the cold air over the land, and the difference in temperatures sets a natural stage for storm formation and intensification each and every winter.
Over the last decade, sea surface temperatures (SSTs) have been above normal entering the heart of winter, with multiple periods of near record warm sea surface temperatures during winter as well as during other seasons. Specifically in the last five years, as seen in the map and time series of Figures 3 and 4, SSTs have averaged one to three degrees Celsius (roughly 1.8 to 5.5 degrees Fahrenheit) above normal. The anomalously warm, and for several recent years near record, winter SSTs have two critical impacts helping to drive the increased snowstorm frequency and severity:
- Frequency of events: The uncharacteristically warm SSTs further increase the naturally occurring difference in temperature between the relatively warmer ocean and colder land when Arctic air masses reach the Atlantic. The increased temperature contrast increases the potential of storm formation, as well as the heightened frequency of a series of winter storms to form in the span of several weeks.
- Severity of events: The stronger contrast in temperature also sets the stage for more vigorous storm development, rapid intensification, and the potential for higher peak intensity of the storm system. Doubling down on increased likelihood of higher severity is the fact that warmer SSTs increase the potential for evaporation of ocean water into the storm system. Ultimately, this increase in moisture will precipitate out as snowfall with amplified snowfall rates due to the stronger temperature contrast.
Until the anomalously warm Western Atlantic SSTs wane towards normal levels, there is an expectation of increased winter storm frequency along with the potential for increased severity.
The Billion Dollar Question: Do Extreme Snowstorm Events Correlate to Major Insurance Industry Losses in Excess of US$1 Billion in Loss?
As discussed in the prelude, it takes more than just a major snowstorm to cause insurance industry losses to accumulate to meaningful levels. Leveraging NOAA’s billion dollar event loss database, how have US$1 billion in economic losses correlated to the NOAA Northeast Snow Index Scale (NESIS)?
Figure 3: Sea surface temperature (SST) anomalies in the North Atlantic entering the heart of winter, spanning the period of 2013-17. The unusually warm SSTs provide extra fuel for strengthening winter storm systems, as well as more evaporation off the ocean to then precipitate out as snowfall over land. (Source: ClimateReanalyzer.org/Climate Change Institute, University of Maine)
Sixteen winter storm events exceeding US$1 billion have occurred since 1980, totaling US$45 billion in economic loss (inflation, but not exposure, adjusted) as measured by NOAA. Winter storms that receive a NESIS rating have accounted for US$30 billion of the total US$45 billion. With two-thirds of loss being associated with heavy snow storms, US$15 billion of winter storm loss is not tied to extreme snowstorms but rather associated with deep freeze events.
Examining all billion dollar winter storm events in the hyperactive period of the last ten years reveals a different outcome. Every billion dollar winter storm since 2008 has also received a NESIS rating. Hence, all billion dollar events that were not accompanied by a NESIS rating predominantly occurred in 1980s/90s. It stands to reason that the increase in SSTs, providing additional moisture in the clash of Arctic air outbreaks, is a major player for this shift in loss attribution.
A similar set of conditions were prevalent heading into the winter of 2018/19 as has been the case over the past decade.
Anomalous warmth in the Western Atlantic continues to play a role, hence the increased frequency and severity of the past decade is more likely than not to persist.
Figure 4: Winter sea surface temperature (SST) anomalies off the Eastern Seaboard of the United States since 1950, with four of the five warmest ocean temperature winters transpiring this decade. (Source: NOAA/ OAR/ESRL PSD, Boulder, Colorado, USA, from their Web site at http://www.esrl.noaa.gov/psd/)