The Northwest Pacific typhoon season is forecast to see above-normal levels of storm activity in 2023, with 13 intense typhoons predicted by Tropical Storm Risk (TSR).
Tropical Storm Risk (TSR), operated by EuroTempest, released its early forecast for the 2023 Northwest Pacific typhoon season recently.
The company said that it expects, “Northwest Pacific typhoon activity in 2023 will be around 30% above the 1991-2020 30-year norm.”
Adding that, “This forecast has more confidence than is usual at this range.”
Additionally, TSR explained, “The TSR early May forecast for Northwest Pacific typhoon activity in 2023 anticipates a season with above-norm activity.
“TSR uses the strong link between the annual Northwest Pacific ACE index and August-September-October (ASO) ENSO combined with the increasing expectation that moderate or strong El Niño conditions will develop and persist through ASO 2023.”
The forecast calls for an accumulated cyclone energy (ACE) index of 394 for the 2023 Northwest Pacific typhoon season, which compares to the 1991 – 2020 climatology of 301.
As a result, TSR gives it a 74% likelihood that Northwest Pacific ACE in 2023 will be above the 1991-2020 30-year norm, and a 60% chance it will be in the upper tercile of years 1991-2020.
The 2023 Northwest Pacific typhoon seasonal forecast from TSR calls for 29 tropical storms to form, with 19 becoming typhoons.
Of those 19 typhoons, 13 are forecast to become intense. An intense typhoon as one where 1 minute sustained winds reach greater than 95 kts (over 109 mph).
The Northwest Pacific typhoon season covers tropical storms that could threaten anywhere from the Philippines to Japan, as well as China, Taiwan, and other countries with a concentration of property insurance and reinsurance exposure.
Northwest Pacific typhoons are a peak zone peril for reinsurance, catastrophe bond and other insurance-linked securities (ILS).
Japan typhoon risk is a particular peak peril of note, given it features relatively heavily in ILS’ and catastrophe bonds, while outside of that there is still some risk exposure in the ILS market from China, Taiwan, the Philippines and South Korea.
As ever, it is the steering of typhoons and where precisely they might track towards and make landfall that could make them a threat to any exposed ILS, cat bonds, or reinsurance positions.