Impacts of global warming on hurricane-driven insurance losses in the United States

North Atlantic hurricanes are a major driver of property losses in the United States and a critical peril for the insurance industry on a global scale. Despite the growing scientific consensus around the potential impacts of global warming on North Atlantic hurricanes, the implications for the insurance industry are still largely unquantified. We address this question by drawing on 70 years of historical hurricane data, including wind-, precipitation-, and storm surge-driven losses to the US property insurance industry. We condition this historical dataset to generate stochastic event sets for the 2- and 4-degree warming scenarios in accordance with the 2021 IPCC projections. We find that global warming may increase insured losses by up to 25%, with greater impacts at lower return periods than in the tail. The 100-year loss scenario in the historical baseline may be exceeded on average every 80 years in a warmer climate. Furthermore, the average annual insurance loss may increase by 12% to 16%, with the largest relative increase attributable to precipitation-induced losses. These results provide us with a concrete base to assess the relevance of global warming in relation to other important insurance loss drivers, such as economic inflation, litigation, and exposure growth.