Recalibrating risk: A simplified model for North Atlantic hurricanes in a warming climate

In this study, the authors introduce the Schroders Capital Insurance-Linked Securities (SCILS) model: a simple, physically grounded framework that leverages projected climate proxies (Cyclone Genesis Index, Potential Intensity) to estimate category-specific North Atlantic landfall rate changes for different global warming levels (GWL), while keeping vulnerability and exposure constant. They then apply these rate changes to resample a standard YELT, producing climate-adjusted loss distributions without rerunning full track simulations.

Key points emerging from the study include:

1. Simplified hurricane model using physical proxies shows losses rise 15% due to near-present climate adjustment (+1.2°C) and 44% for +2°C.
2. Hurricane frequency change plays a critical yet poorly understood role in North Atlantic hurricane risk in a warming climate.
3. Resampling can adjust static event sets to near-present climate but underestimates extremes; spatial models better capture tail risk.