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Tropical cyclones - What the 2015-2016 tropical cyclone outlook means

Tropical cyclones are the largest damage producing weather system across tropical Australia. Hence it is very important that all businesses and private property and activities are correctly insured from the damage and disruption these intense storms periodically produce.

The release of the Australian Bureau of Meteorology’s tropical cyclone outlook reminds us that the tropical cyclone season for Australia is now upon us. The Bureau’s outlook is found here.

Although it is a strong El Niño for the start and middle of the season and the total number of tropical cyclones may be reduced compared to normal years there have been very intense tropical cyclone impacts in previous El Niño years. The El Niño is also likely to be weakening by the end of the cyclone season. You only have to go back to the 2009/2010 El Niño and recall that there were four tropical cyclone impacts on the Australian coast that season, including TC Ului that significantly damaged the Whitsunday region of Queensland. So business owners and the public have to be reminded that although the season as a whole may be quieter than normal and the start of the cyclone season could be delayed, experience from similar seasons from the past reminds us that there continues to be a risk of severe and damaging tropical cyclones with the risk of cyclone impact building through the second half of the season.

In Australia the intensity of tropical cyclones is simplified into five categories, as shown in the Table below. This intensity scale is different to the scale used to describe tropical cyclones (hurricanes) in the USA region, which is the Saffir Simpson Hurricane Intensity Scale. Once a tropical cyclone reaches Category 3 intensity it is classified as a severe tropical cyclone. However, even low category tropical cyclones can be very damaging, such as category 1 TC Wanda that triggered the devastating Brisbane floods in 1974.

Table 1: The Australian Tropical Cyclone Intensity Scale. Source: The Australian Bureau of Meteorology.

In Australia once a tropical cyclone has sustained gale force winds it is given a name, with alternating male and female names that run through the alphabet. Any tropical cyclone that leads to a death or major property damage has its name retired. The list of names that can be used for tropical cyclones that form in the Australian region are found here: http://www.bom.gov.au/cyclone/about/names.shtml

The cost of tropical cyclone impacts

The Insurance Council of Australia published the top 10 most damaging catastrophe events for Australia through to the end of 2011. Tropical cyclones made up three of these with Tropical Cyclone Tracy, which destroyed Darwin on Christmas eve in 1974, the second most damaging natural disaster for Australia. Its damage bill, in 2011 dollars, is estimated to be over $4,000million. Other cyclones in the top 10 are TC Madge (1973) and the more recent TC Yasi that struck the Innisfail region in 2011.

The most recent tropical cyclone to significantly damage Australian property was TC Marcia that struck the Yeppoon – Rockhampton region in February this year. The radar image of TC Marcia as it crossed the coast is shown below.

Figure 1: Radar image of TC Marcia at it crossed the coast north of Yeppoon on the morning of 20 February 2015. Source: Australian Bureau of Meteorology.

Marcia, which produced insured damage totalling $522million according to Insurance Council of Australia figures, served as a reminder that even parts of Australia that have not experienced a tropical cyclone in recent years, even decades, are still vulnerable to tropical cyclone impacts. You only have to look at the Bureau of Meteorology’s tropical cyclone track map spanning the period from the 1908/1909 season through to the 2006/2007 season to see that a very large portion of the Australian coastline and inland areas are susceptible to cyclone related damage.









Figure 2: Map showing the tracks followed by historical tropical cyclones through the period from 1908 through to 2006. Source: The Australian Bureau of Meteorology.










Insurance required to protect businesses and personal property

Damage from tropical cyclones can come in several guises and can be extremely severe. There can be direct damage produced by destructive winds that accompany the passage of a tropical cyclone, or flash and river flooding from the cyclone’s very heavy rainfall, a combination of wind and rain damage, or storm surge from elevated sea levels, along with wave damage. There can be prolonged power and telecommunication outages. Water supplies can be interrupted, as can all forms of transportation.

Business interruption following a major tropical cyclone impact can therefore be substantial and so the insurance cover offered must take into account the possible prolonged power, communications and supply outages that can follow a major tropical cyclone impact.

Marine activities and vessels are particularly vulnerable to tropical cyclone impact as the tropical cyclone impacts tend to be greatest along the coastal fringe of Australia.
If you would like to discuss how CGU’s insurance product best cover your clients’ needs please contact your Business Relationship Manager.

Prepared by Dr Bruce Buckley IAGRE Natural Perils, Chief Analytics Office