Insurance and Climate Change column

New Climate Index Shows Extreme Weather Is Now 3 Times More Frequent

By | January 12, 2017

Extreme weather over the last five years has been occurring with a regularity that’s about three times the norm, according to a newly created index from a group of number crunchers.

The Actuaries Climate Index, which was officially launched near the end of 2016, takes data from “neutral, scientific sources, generating objective, evidence-based results on extreme weather events,” according to the index’s creators.

The key metric is a five-year moving average, which enables users to see a clear climate signal.

The current five-year moving average value for the index is 1.02 – a small, but potentially eye-popping figure if you know what it means. The index value reached a value of 0.5 in 1998 and first reached 1.0 in 2013.

Those values indicate a sustained increase in the frequency of extreme weather occurrences and changes in sea levels, according to the keepers of the index, which highlights 12 regions in the U.S. and Canada.

The index is based on analysis of quarterly seasonal data for six components – each of which is a monthly or seasonal time series based on measurements from a network of meteorological stations and coastal tide stations – compared with a reference period of 1961 to 1990. These components measure extremes rather than averages, because extremes have the largest impact on people and property, according to the index creators.

In actuarial-ese, the index is the sum of component values divided by the number of components. The six index components are:

  1. Frequency of temperatures above the 90th percentile;
  2. Frequency of temperatures below the 10th percentile;
  3. Maximum five-day rainfall in the month;
  4. Consecutive dry days;
  5. Winds above the 90th percentile;
  6. Sea level.

The index was designed to be an educational tool to help inform actuaries, policymakers and the public about climate trends and their potential impact, said Doug Collins, chair of the Climate Change Committee, which developed the index.

The recently created Acturaries Climate Index shows increased extreme weather over the last five years compared with a 30-year average.

The committee is a joint effort of the American Academy of Actuaries, the Canadian Institute of Actuaries, the Casualty Actuarial Society and the Society of Actuaries.

The index was put together over a period of about eight years, according to Collins.

“The idea was to come up with the simplest, most objective way to measure changes in climate as well as sea level,” he said. “It will be useful to the insurance industry as well as public policy makers who are looking at information on climate.”

He said the website portal where the latest data in the index can be found has had more than 8,000 visits since launching on Nov. 30 and more than 400 visitors have downloaded data from the site.

The data is free.

There were some costs involved with creating the index, such as paying consulting firm Solterra Solutions of Victoria, B.C., and web developer Matrix​ Group International of Arlington, Va., but most of the work was done on volunteer basis by actuaries, many of whom are employed by companies in the U.S. and Canada.

A number of actuarial and communications staff members from the associations were also involved in the development of the site and its launch, and Collins volunteers his time. All costs are shared among the four sponsoring organizations.

Back to the current index.

The index is calculated so that its average value from 1961 to 1990 is exactly 0.​ In other words, the index value for each season is calculated as the anomaly relative to the average index during the reference period, therefore the average value of the index for those 30 years is 0.

While it varies from season to season and month to month, over the past five years the index has been above 1.

According to Collins, 1 and above is a fairly large change.

“One way you could describe the value of 1 means that an event that occurred about a sixth of the time during the reference period (1961 to 1990) is occurring on an average basis now, so it’s going from a probability of one-sixth to a probability of 50 percent,” Collins said.

That means extreme weather over the past five years has occurred more than three times normal – with normal being the reference period.

The index shows the current highest five-year average values by region are: Northwest Pacific (British Columbia and Yukon Territory); Northeast Atlantic (New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island); and Southern Plains (Kansas, Montana, North Dakota, Nebraska, Oklahoma, South Dakota, Texas and Wyoming).

“In the U.S we’re seeing high numbers on the East Coast and in the Southwest,” Collins said.

Despite climate change being a political hot potato in the U.S., Collins said the group hasn’t gotten much grief from people who don’t believe that the climate is changing or that climate change is manmade – it should be noted that Collins and his group aren’t taking sides on the latter.

“We have not had any experience with that so far,” Collins said of the lack of criticism.

As for whether that lack of criticism so far means the new Trump administration will embrace the index as a valuable tool for policymakers?

“We’re just waiting to see what happens,” Collins said. “I’m not sure that the incoming administration has paid attention to this. I’m sure they’ve got a lot of other more important things that they are thinking about right now.”

He added: “We’re hopeful that they will find some use in our data.”

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