Climate Change: The WPC View

Climate change, and its impact on extreme weather events, represents a significant challenge to the insurance industry going forward. One of the objectives of WPC’s team of scientists is to digest and interpret ongoing scientific developments in the area of climate change and to provide a balanced perspective that separates fact from hyperbole. This effort consists of thorough reviews of scientific publications and reports, attendance at meteorological conferences, and interactions with leading scientists in face-to-face scientific discussions at our offices. Our goal is to provide detailed summaries of the state of climate change science on a regular basis, and highlight potential insurance industry implications, where appropriate.

Climate Change Impact on Extreme Weather Events and Sea Level

WPC’s investigations indicate that the following phenomena are expected to show increasing deviations from historical norms as the earth continues to warm:

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Tropical Cyclones

The impact of climate change on hurricanes and tropical cyclones is a very dynamic research area, and new developments are appearing at a rapid rate. Several key questions remain unresolved, but some conclusions are beginning to emerge. Recent studies have suggested that tropical cyclone intensities are likely to increase as sea surface temperature increases over the next century. Rainfall rates associated with tropical cyclones are also expected to increase as a warmer atmosphere leads to increasing water vapor concentrations. However, our internal consensus view is that specific numerical predictions regarding changes in tropical cyclone frequency remain premature, as recent research still shows a lack of convergence on this issue. It should be noted that none of the changes listed above are enormous, and the time scales over which they are currently estimated to occur range in the order of multiple decades.

Sea Level

The latest Intergovernmental Panel on Climate Change (IPCC) projections of sea-level rise during the 21st century were unusual in that the reported consensus view only articulated an agreed lower bound for likely sea-level rise. We believe that this reporting decision by the IPCC indicates that the scientific community, while sharing a consensus view that sea-level rise will occur, is highly uncertain regarding the critical issues of when and how much.

In our view, the principal source of uncertainty relates to current modeled understandng of expected polar ice cap melt. While present climate models do a good job of reproducing global temperature change over the last century, they are more limited in accurately reproducing observed changes in polar ice cover. Per recent observations, the ice caps are melting more rapidly than the widely used climate models had suggested, which may indicate that present IPCC lower-bound predictions of sea-level rise are indeed underestimates. Recent research indicates, however, that dramatic sea-level rise due to catastrophic collapse of either the Greenland or Western Antarctic Ice Sheets is very unlikely for at least the next several decades.

European Winter Storms

Recent work by a group of European scientists under the MICE (Modeling the Impacts of Climate Extremes) program indicates that European Winter Storm activity is likely to follow a similar pattern to North Atlantic hurricanes, with winter storms becoming slightly stronger and wetter. According to the MICE program findings, these storms may also become less frequent. However, this is an area where meaningful uncertainty remains.

Extreme Precipitation Events

The consensus view of the scientific community, which we share, is that episodes of extreme precipitation are becoming more frequent and will account for an increasingly large percentage of total rainfall. According to these estimates, going forward, precipitation may well be less frequent but more intense, with extreme precipitation events likely to increase. For instance, according to the recently released report from the U.S. Climate Change Science Program (USCCSP), daily precipitation so heavy that it now occurs only once every 20 years is projected to occur approximately every eight years by the end of this century over much of Eastern North America, using a mid-range assumption for carbon emissions. This is likely to have important implications for agriculture and water management.

Extreme Temperature Events

According to NASA’s Goddard Institute for Space Studies, every year since 2001 has fallen among the top ten warmest years since 1880. This has been accompanied by an increase in the number of unusually hot days and nights, and more frequent heat waves. Similarly, there has been a decrease in the number of unusually cold days, cold snaps and frost days. The WPC team shares the scientific community consensus view that these trends are very likely to continue in the decades ahead. For example, according to the USCCSP, a day so hot that it is currently experienced only once every 20 years would occur every three years by the middle of the century over much of the continental U.S., under mid-range emissions assumptions. These developments are likely to have important impacts on agriculture, as well as energy usage.