2014 is on course to be one of the lowest years for U.S. tornado activity on record. The number of tornadoes recorded so far throughout the states is below the absolute minimum ever recorded and roughly half the amount recorded in 2011.
The data, provided by the National Oceanic and Atmospheric Administration’s (NOAA) Storm Prediction Center (SPC), notes that these figures are preliminary and subject to change, but all the signs are pointing to an extremely low tornado season, possibly the lowest ever recorded.
It remains unclear exactly as to why 2014, 2013 and 2012 tornado activity has been so far below the yearly average (1260), as seen in the image below which details U.S. tornadoes up to the end of November.
Although colder than normal weather patterns do contribute to storm patterns, Greg Carbin, Warning Coordination Meteorologist at SPC, in a recent article in the Washington Post declared, “there is much more to it.”
Some scientists have claimed in the past that climate change could be linked to extreme highs and lows in tornado activity, similarly with hurricanes, but there isn’t any widely accepted evidence to support this theory at all currently.
But what we do know is that for the majority of the 2014 tornado season warmer, moister air over the Gulf of Mexico was absent due to particularly cooler than normal atmospheric conditions in the eastern U.S. This resulted in a more stable atmospheric environment, which in turn means fewer opportunities for tornadoes to form.
Technological advances in observation equipment and an increase in professional and amateur storm spotters, ensures a tornado is rarely missed in the U.S. And as the image below shows it’s not only the amount of active tornadoes that have been way down in 2014, it’s also the total tornado watch count, which as these two images show were way below the normal in 2014.
The final chart worth reviewing is the inflation adjusted tornado trend and percentile ranks, which clearly shows that 2014 is on track at the moment to be the lowest year for U.S. tornadoes in the record books.
U.S. tornadoes are a consistent and growing trend within the insurance-linked securities (ILS), reinsurance and catastrophe bond sector, with multiple deals providing protection for the severe thunderstorm peril, which includes tornado occurrence.
Perhaps most notably, but by no means the only, is the U.S.-based primary insurer USAA’s sponsored Residential Reinsurance series of cat bonds which, according to data from the Artemis Deal Directory, has issued more than 50 tranches of notes across various deals, the majority of which have offered USAA protection for severe thunderstorms (tornadoes).
Despite a high level of catastrophe bonds covering tornadoes it’s unlikely any losses will occur this year due to 2014 being a particularly benign season. However, it is worth noting that the Gator Re cat bond has seen an aggregate retention layer, beneath the cat bonds trigger, being eroded by even this benign tornado year. How Gator Re will survive even an average tornado year without being triggered in the remaining risk periods could be interesting to see.
Researchers and experts like Carbin are constantly examining the trends in tornado activity, why year-on-year figures differ so much and what the root cause for this might be is an ongoing question currently without an answer.
Such information would be hugely valuable to insurers, reinsurers, ILS and catastrophe bond investors, as a better understanding of severe thunderstorm and tornado trends would help to promote sounder, more accurate underwriting and investment practices.