Post-storm season forecast

With lots of luck, the second half of the 2006 hurricane season will be as uneventful for most East Coast residents and businesses — and insurers — as the first half has been. Not that the first half hasn’t had its moments. Just ask the many people in Virginia and the Carolinas whose homes and lives were turned upside down by Ernesto.

But compared to last year, this hurricane season has been mild.

Some forecasters have revised their warnings and now do not expect as many storms to develop into full-fledged hurricanes as first thought. Forecasters at Colorado State University have lowered their hurricane predictions for the year, based on below-average activity in August, as well as the ocean-weather patterns they track.

“We expect slightly above-average activity in September and that October will likely have below-average activity. We now predict that total seasonal activity will be slightly below the long-term average,” reported William Gray and Phil Klotzbach.

The Colorado team still expects three hurricanes, two of them major, to form in the Atlantic basin this month. In October, the researchers said they expect two named storms, one hurricane, but zero major hurricanes. But they have reduced the overall number of days they expect tropical storms and hurricanes to be active during September and October.

Will the forecasters be right? Will fewer hurricanes emerge? It’s still too early for property owners, the insurance industry or public officials to rest without worrying about this season’s storms but it’s not too early for the insurance industry and regulators to have a plan for explaining insurance costs should no big losses occur.

If the immediate hurricane trend does continue, there may be another storm that the insurance industry will have to weather: a political storm.

Having restricted writings in many coastal areas, raised rates to account for hurricane losses, and stressed mitigation efforts by property owners, the insurance industry may face a new round of questioning if the losses they, their modelers and reinsurers anticipated do not happen.

Property owners might be relieved not to have to endure major losses, however they are likely to question where all those extra premium dollars they paid for this season are going. Some groups are likely to call for refunds. Others are bound to question the accuracy of insurance models that predicted major losses.

Insurance prices are never popular and often misunderstood. The political storm that could follow a milder-than-feared hurricane season might be an opportunity to do some explaining at a time when many more than usual will be paying attention.

A political storm is preferable to a claims storm that affects lives, properties and communities but both storms require planning if they are to be handled correctly.