Seasonal U.S. Hurricane Forecast Accuracy Varies, Multi-Year Views More in Line With...

Wed Apr 2, 2008 12:15pm EDT

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Seasonal U.S. Hurricane Forecast Accuracy Varies, Multi-Year Views More in
Line With Actual Activity: Aon Re Study
Atlantic hurricane season forecasters' cumulative predictions over five years
more accurate than one-year predictions

CHICAGO, April 2, 2008 /PRNewswire-FirstCall/ -- As leading hurricane
season forecasting organizations begin issuing updated tropical season
forecasts for the 2008 Atlantic Hurricane Season, an analysis by Impact
Forecasting LLC, a unit of Aon Re Global, found seasonal outlooks for
individual years are generally less accurate than when those individual
forecasts are measured cumulatively against actual hurricane activity over
periods of five years or longer.
    (Logo:  http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO)
    The finding demonstrates the difficulty of seasonal hurricane forecasting
and further stresses the importance of insurers, reinsurers and risk managers
taking a longer term view of climatic activity.
    According to Impact Forecasting's analysis, tropical season predictions
released in May 2007 and 2006 by top hurricane researchers at Colorado State
University (CSU), the National Oceanic and Atmospheric Administration (NOAA)
and Tropical Storm Risk (TSR) overestimated the number of hurricanes and major
hurricanes (hurricanes that achieve or exceed Category 3 status on the
Saffir-Simpson Scale) that ultimately would form in the Atlantic and Caribbean
oceans. The discrepancies between forecasted activity and actual activity have
been attributed to the unanticipated levels of dust and dry air that settled
across the region of the Atlantic Ocean where tropical systems and hurricanes
tend to develop.


    2007 Atlantic Hurricane Season Forecasts (May-issued forecasts)
                                                               Actual 2007
    Forecast         25-year      CSU       NOAA       TSR       Season
    Parameter        Average    Forecast  Forecast   Forecast     Total

    Named Storms       11.0        17       13-17        16         15
    Hurricanes          6.4         9        7-10         9          6
    Major Hurricanes    1.2         5         3-5         4          2


    2006 Atlantic Hurricane Season Forecasts (May-issued forecasts)
                                                                Actual 2006
    Forecast         25-year       CSU       NOAA        TSR       Season
    Parameter        Average     Forecast  Forecast    Forecast     Total

    Named Storms       11.0        17       13-16        14          9
    Hurricanes          6.4         9        8-10         8          4
    Major Hurricanes    1.2         5         4-6         3          2



    "Hurricane season forecasting, which is still a relatively new practice,
is difficult due to the complex and dynamic nature of the atmosphere," said
Steve Drews, Impact Forecasting associate vice president and lead
meteorologist.  "These forecasts are built on existing theories about how the
atmosphere should respond in certain scenarios, but the outcomes aren't always
what is expected.  As a result, researchers refine their forecasting
techniques every year as new data and discoveries surface."
    When analyzing five years of forecasts for named storms, hurricanes and
major hurricanes, Impact Forecasting found the forecasts have been quite
accurate when compared to average season values.


    2003-2007 Atlantic Hurricane Season Forecasts (May-issued forecasts)
                    2003-2007
                   Expectation
                     Based on                                      Actual
    Forecast        Historical     CSU       NOAA       TSR      2003-2007
    Parameter        Averages   Forecasts  Forecasts  Forecasts     Total

    Named Storms         55        77        61-78       68          81
    Hurricanes           32        42        34-46       38          41
    Major Hurricanes      6        20        14-24       16          20



Steve Jakubowski, Impact Forecasting's executive vice president and chief
operating officer, added: "The current forecasting uncertainty within these
seasonal hurricane predictions shows that insurers need to have confidence
that they are prepared and have a clear understanding of their exposures, not
only through accurate and careful policy planning but also through robust
catastrophe modeling."
    The analysis, contained within Aon Re Global's 2007 Annual Global Climate
and Catastrophe Report, utilized May forecasts for the Atlantic Hurricane
Season issued by Colorado State University, the National Oceanic and
Atmospheric Administration and TropicalStormRisk.com since 2003.  These
forecasts were compared to what occurred across the Atlantic and Caribbean
basins during single years and within a five-year period.  The Aon Re Global
2007 Annual Global Climate and Catastrophe Report is available for download
at: http://aon.mediaroom.com/index.php?s=63&item=191.
    Updated forecasts from two of these units will be issued in the coming
days. Colorado State University researchers Dr. Philip Klotzbach and
Dr. William Gray will be discussing their upcoming forecast to attendees of
the National Hurricane Conference in Orlando this week, while Tropical Storm
Risk researchers Professor Mark Saunders and Dr. Adam Lea will be releasing
their updated 2008 Atlantic Hurricane Forecast on April 7.  NOAA typically
issues its Atlantic Hurricane Season forecasts between the middle and end of
May.
    About Aon
    Impact Forecasting is a center of excellence within Aon Re Global, the
world's leading and most preferred reinsurance intermediary. Impact
Forecasting produces catastrophe analysis and modeling services.  Models
include hurricane wind and surge, earthquake, tornado and hail, wildfire, and
terrorism perils.
    Aon Re Global, the world's leading and most preferred reinsurance
intermediary, provides clients with integrated capital solutions and services
through a world-class network of experts in more than 35 countries. Clients
are better able to differentiate and meet their business objectives with Aon
Re Global's best-in-class treaty and facultative reinsurance placement
services, capital markets expertise, and relevant analytics and technical
expertise, including catastrophe management, actuarial, and rating agency
counsel. Aon Re Global was named best reinsurance broker in 2007 and 2006 by
readers of Business Insurance, in 2007 by readers of US Insurer and in 2006 by
readers of Reinsurance.
    Aon Corporation (NYSE: AOC) is the leading global provider of risk
management services, insurance and reinsurance brokerage, human capital and
management consulting, and specialty insurance underwriting. Through its
43,000 professionals worldwide, Aon readily delivers distinctive client value
via innovative and effective risk management and workforce productivity
solutions. Our industry-leading global resources, technical expertise and
industry knowledge are delivered locally through more than 500 offices in more
than 120 countries. Aon was ranked by A.M. Best as the number one global
insurance brokerage in 2007 based on brokerage revenues, and voted best
insurance intermediary, best reinsurance intermediary, and best employee
benefits consulting firm in 2007 by the readers of Business Insurance. For
more information on Aon, log onto http://www.aon.com.
     Media Contacts
     Rahsaan Johnson             David Prosperi
     312.381.2684                312.381.2485
     Rahsaan_Johnson@aon.com     David_Prosperi@aon.com

SOURCE  Aon Corporation

Rahsaan Johnson, +1-312-381-2684, Rahsaan_Johnson@aon.com, or David Prosperi,
+1-312-381-2485, David_Prosperi@aon.com, both of Aon Corporation
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