A Decadal Climate Service for Insurance: Skillful Multiyear Predictions of North Atlantic Hurricane Activity and U.S. Hurricane Damage

Abstract North Atlantic Ocean hurricane activity exhibits significant variation on multiannual time scales. Advance knowledge of periods of high activity would be beneficial to the insurance industry as well as society in general. Previous studies have shown that climate models initialized with current oceanic and atmospheric conditions, known as decadal prediction systems, are skillful at predicting North Atlantic hurricane activity averaged over periods of 2–10 years. We show that this skill also translates into skillful predictions of real-world U.S. hurricane damage. Using such systems, we have developed a prototype climate service for the insurance industry giving probabilistic forecasts of 5-yr-mean North Atlantic hurricane activity, measured by the total accumulated cyclone energy (ACE index), and 5-yr-total U.S. hurricane damage (given in U.S. dollars). Rather than tracking hurricanes in the decadal systems directly, the forecasts use a relative temperature index known to be strongly linked to hurricane activity. Statistical relationships based on past forecasts of the index and observed hurricane activity and U.S. damage are then used to produce probabilistic forecasts. The predictions of hurricane activity and U.S. damage for the period 2020–24 are high, with ∼95% probabilities of being above average. We note that skill in predicting the temperature index on which the forecasts are based has declined in recent years. More research is therefore needed to understand under which conditions the forecasts are most skillful. Significance Statement The purpose of this article is to explain the science and methods behind a recently developed prototype climate service that uses initialized climate models to give probabilistic forecasts of 5-yr-mean North Atlantic Ocean hurricane activity, as well as 5-yr-total associated U.S. hurricane damage. Although skill in predicting North Atlantic hurricane activity on this time scale has been known for some time, a key result in this article is showing that this also leads to predictability in real-world damage. These forecasts could be of benefit to the insurance industry and to society in general.