Storms strike insurance rates

Scientists haven't reached a consensus about whether global warming makes hurricanes more frequent and fierce, but that hasn't stopped the insurance industry from raising its defenses -- and its rates.

Many coastal property owners in North Carolina have seen their insurance rates increase 25 percent since May. Rates are rising amid fears that North Carolina could be hit by a storm as destructive as Hurricane Katrina, which ravaged the Gulf Coast in 2005, or as powerful as Hurricane Dean, which struck Mexico last week.

"I know everybody on the coast is suffering from high insurance rates," said William Baggett, an owner of the oceanfront Blockade Runner hotel in Wrightsville Beach. He said his rates have quadrupled since 2005. "I don't think they are quite justified."

Officials with the N.C. Rate Bureau, which prepares rate requests for insurance companies, don't specifically blame global warming for more hurricanes. But the insurance rate increase was based on historical records of hurricane strikes, plus scientific data showing increased ocean temperatures in recent years. Some scientists think the warmer waters are fueling more intense hurricanes.

Insurance risk models used to predict hurricane damage and rate requests indicate that the Atlantic Ocean has warmed up to seven-tenths of a degree Fahrenheit since 1995.

"We believe we're in a period where global climate factors favor hurricane development," said Ray Evans, general manager for the N.C. Rate Bureau, which had sought a 100 percent increase in coastal property premiums, rather than the 25 percent jump.

Evans said the Rate Bureau estimates the annualized losses from a hurricane hitting the coast are about $200 million. But based on recent years, that number has jumped to about $275 million. For example, Hurricane Floyd, the nation's 11th-most-costly storm, caused $4.5 billion in damages in North Carolina and other states in 1999, federal records show.

"Climatologically speaking, we understand if sea surface temperatures are elevated, then there is an opportunity for more hurricanes to form and be more severe," Evans said.

The assertion is based on a simple recipe: Warm seas feed tropical storms. Hurricanes generally occur where sea surface temperatures exceed about 80 degrees. In the Atlantic, sea surface temperatures and hurricane activity vary from decade to decade.

Even accounting for natural changes, ocean surface temperatures have trended up over the past century, with the sharpest increase in the past 35 years as cars, factories, power plants and machines have pumped more heat-trapping gases into the atmosphere. There is broad consensus among the world's scientists that these gases raise global temperatures, which in turn raise ocean temperatures.

"The sea surface temperature has been marching up the staircase," said Peter Webster, an atmospheric scientist at the Georgia Institute of Technology. "Marching up with it is the number of storms."

But not all scientists agree with the assertion that higher ocean temperatures spawn more hurricanes. The study of hurricanes is relatively new. Data haven't been consistently collected over the decades and across the globe. And wide fluctuations in severity and frequency are natural.

What is clear is that uncertainty about hurricanes has made it difficult for states, communities, businesses and property owners to plan for responses to increased storm activity.

Some wait and see

Although some, such as those in the insurance industry, have bet on more storms, other stakeholders have taken a wait-and-see approach.