Insurers braced for US hurricanes

THE London insurance market is battening down the hatches for losses of more than £1.25bn this year after forecasts for a worse-than-usual hurricane season in the US with indications of up to nine hurricane-force storms, of which five could lead to major destruction.

Forecasters at the National Oceanic and Atmospheric Administration (NOAA), which tracks North Atlantic weather systems before making its forecasts, say as many as five major hurricanes could be worse than last year's quartet - Charley, Frances, Ivan and Jeanne - which battered the Caribbean before smashing into the south-eastern US.

The hurricane season officially starts on 1 June and runs through to November, with September historically being the worst month for destruction.

Lloyd's of London chairman Lord Levene is already admitting that 2005 could turn out to be worse than last year when London underwriters lost $2.3bn (£1.25bn) from insurance claims.

Eight of the last 10 years have officially been 'above normal' for hurricanes but this year could be the worst season for some time. 'Our prediction for the 2005 Atlantic hurricane season is for 12 to 15 tropical storms [wind speeds of more than 39mph], with seven to nine becoming hurricanes [more than 73mph], of which three to five could become major hurricanes [more than 111mph],' says NOAA administrator Conrad Lautenbacher.

The first storm of the year will be called Arlene and a particularly bad season could see the alphabetically named storms reach Wilma.

At an insurance convention in Florida, Levene admitted Lloyd's insurers are 'holding their breath' ahead of an expected tough season. He also warned that, despite Lloyd's continued commitment to covering the region, insurers could be in for a difficult number of years. 'The industry may have weathered the storms in 2004 but there are testing times ahead,' he said.

Forecasters fear a lively hurricane season because of warmer than usual temperatures in the North Atlantic and the expectation of volatile weather systems because of a weakening of the El Nino (sea-warming) effect in the Pacific off the coast of South America.