At least up until 2005, global warming was often cited as the likely culprit of increasingly devastating Atlantic hurricanes, as with other weather and climate phenomena. Rising ocean temperatures were thought to provide more energy, powering increasingly powerful storms. It’s a simple enough formula, and rising insurance claim costs seemed to bear it out. However, according to a recent announcement from the National Oceanic and Atmospheric Administration NOAA, it's simply not the case.

There may be ample reason to believe that climate change is occurring and that it is taking the form of warmer temperatures worldwide. However, the NOAA says, increased hurricane-related losses are due not to stronger storms but to greater concentration of people and more valuable property in storm-prone areas:

“We found that although some decades were quieter and less damaging in the U.S. and others had more land-falling hurricanes and more damage, the economic costs of land-falling hurricanes have steadily increased over time,” said Chris Landsea, one of the researchers as well as the science and operations officer at NOAA’s National Hurricane Center in Miami. “There is nothing in the U.S. hurricane damage record that indicates global warming has caused a significant increase in destruction along our coasts.”

The NOAA source goes on to cite a report in Natural Hazards Review (which sounds more sensational than it reads) that finds that economic damage has been doubling every 10 to 15 years. In a passage minus the global warming but reminiscent of the apocalyptic tone of many global warming-related statements, NOAA's curiously named Landsea says,

“Unless action is taken to address the growing concentration of people and property in coastal hurricane areas, the damage will increase by a great deal as more people and infrastructure inhabit these coastal locations."

Perhaps the only adequate action would be to cease subsidizing the folly of people who insist living in danger zones. But that's not likely to happen. In the meantime people will continue to dwell on the beauty of their chosen landscape and nurse deep denial of the hazards. The temptation can be great; more a mountain than a beach person myself, I was captivated by the possibility of living in Government Camp, Oregon, while staying there for a couple of nights in January. Then I thought of the potential sudden changes to which that landscape is prone.

Assuming that more homeowners and commercial property owners gravitate to dangerous beauties, insurers' best bet is continue to refine their use of geographic information systems both to manage their concentration of risk and to more precisely assess natural hazards within any given territory. Carriers that can both locate lower risk segments of small areas and more accurately identify and price pockets of hazard will have a leg up on their competitors.

The key to getting the most out of GIS, as with other technologies that leverage predictive analytics, is data.

"The latest advancements have nothing to do with improved GIS technology per se. The advancements are coming from better data," says Bill Raichle of ISO. "Out of the box, a GIS is about as exciting as a blank Excel spreadsheet. But when an insurer can add their mix, their internal policy and business level data with high-quality, real-world, GIS risk and market data, new views of the business become possible."

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