This year’s hurricane season could be particularly active with a profound impact on the insurance sector, predicts credit ratings agency Moody’s.

Hurricane forecasters are expecting 22 named storms, compared with the historical average of 14 per year between 1991 and 2020.

“While the 2023 hurricane season was devoid of costly hurricanes, the long-term trend is dire,” said Chris Lafakis, climate economist at Moody’s Analytics.

He said the United States avoided a truly catastrophic hurricane season last year, but if forecasters are correct, they may not be so lucky in 2024.

Mr Lafakis said: “With few signs of a slowdown in building in high-risk coastal areas, a major storm would have significant consequences, not only in terms of the human toll but when it comes to lost output and property damage.”

Mounting temperatures and rising property values resulted in 17 of the 19 costliest tropical cyclones in the US occurring in the past 20 years, even after adjusting for inflation.

North Atlantic hurricanes have cost the insurance industry $275 billion in insured losses since 2017, when the 12-year hurricane drought ended.

“These costly storms also threaten to destabilise the insurance market, as an increasing number of private insurers abandon some or all parts of expensive property markets such as California and Florida,” Mr Lafakis said.

Natalie Ambrosio Preudhomme, associate director commercial real estate, said the 2024 hurricane season came at a time when the commercial real estate industry was grappling with challenges of affordability and availability of insurance.

“Exposure to a strong storm could affect ongoing conversations around risk appetite and alternative risk transfer for lenders and borrowers,” Ms Ambrosio Preudhomme said.

“Event losses are escalating due to population increases in coastal areas, social inflation, construction inflation and regulatory mandates,” Moody’s managing director, insurance, Julie Serakos said.

However, James Eck, Moody’s vice-president senior credit officer, financial institutions, said reinsurers entered the 2024 hurricane season well positioned, with strong capital.

“Property catastrophe pricing remains high, although more competition is entering the market, particularly at the top end of reinsurance programmes,” he said.

He said reinsurance terms and conditions generally remained firm, with primary insurers retaining more risk at lower return periods.

The upcoming Atlantic hurricane season poses challenges to supply chains at a time when they are already trying to manage ongoing risks and build resiliency, senior regional economist, Moody’s Analytics, Adam Kamins said.