Tropical cyclone-induced flooding and the implications for Australian insurers
13 November 2024
In December 2023, Tropical Cyclone Jasper made landfall in far north Queensland a little over a week after forming near the Solomon Islands. The slow-moving cyclone intensified to become a Category 5 tropical cyclone on December 7 and eased to a Category 2 tropical cyclone when it neared Wujal Wujal on December 13.
Over the next several days, Jasper became the wettest tropical cyclone in Australian history. The extreme rainfall included a five-day total of 2,166mm at Bairds near the Daintree River, causing significant damage to properties and industries while isolating communities. One person died, and thousands of animals were killed during the cyclone and its aftermath, with damages estimated at $1 billion and the damage toll continued to grow in the following days after Jasper was no longer classified as a tropical cyclone.
Events like Jasper are not in isolation as six years prior, Tropical Cyclone Debbie had made landfall in Queensland causing $3.5 billion of damage, with a sizeable portion of the losses coming from rainfall-induced flooding.
A concern for insurers is that the rainfall component of tropical cyclones in Australia is fast becoming an increasingly important factor in the damages and losses suffered from these events.
Federation University climate scientist Associate Professor Savin Chand is working on an international project that has been funded by the Gallagher Research Centre, established within its Global Tropical Cyclone Research Consortium, to carry out a comprehensive scientific assessment of tropical cyclones, such as Jasper, and associated rainfall for Australia and the Asia-Pacific.
The multi-year project will see Associate Professor Chand expand on his research into tropical cyclones in the region, including around several Asian countries, the South Pacific and Australia.
"The Gallagher Research Centre wants to understand how these weather extremes are changing as a result of climate change and approached me because of the work I have already been doing in this area," Assoc Prof Chand said.
"Part of the rationale for this work is what happened with Tropical Cyclone Jasper in mid-December 2023. We are seeing increasing impacts from events like Jasper and, more recently, Hurricane Milton in the United States, and our work is part of a global effort – a series of comprehensive scientific assessments – of climate extremes that the Gallagher Research Centre is funding."
Dr Iain Willis, Research Director at the Gallagher Research Centre, said tropical cyclones posed a significant risk around the world and had caused $US2.17 trillion in economic losses and $US710 billion in global insured losses since 2000.
"Federation University joins other world-leading experts in tropical cyclone, including Colorado State University and Vrije University Amsterdam, for what we believe is the insurance industry’s first global initiative of this kind," Dr Willis said.
"The Gallagher Research Centre is delighted to welcome Associate Professor Chand and his research team to the Global Tropical Cyclone Research Consortium. Dr Chand’s work will help us to address the challenges currently facing (re)insurers when assessing tropical cyclone activity in the Australia and Asia-Pacific region, and enable our clients to improve their management of the risk."
Tropical cyclone-induced flooding and impacts for insurers
Associate Professor Chand says one of the emphases of the project for the Australian region will be quantifying tropical cyclone-related rainfall and flooding and how this has changed over the past 50 years since the recording of official tropical cyclone data commenced in Australia.
The work has implications for the Australian insurance industry in the context of the Australia Reinsurance Pool Corporation (ARPC) Cyclone Pool, which provides insurance cover for cyclone and cyclone-related flood damage to houses, small businesses, and strata.
Insurers face a number of challenges in accurately assessing and quantifying their risk to tropical cyclone activity.
Current industry risk models do not fully capture the nuances of tropical cyclone behaviour, including the cascading impacts of wind, flooding, and storm surge, which makes it difficult to understand the interplay between cyclone-induced rainfall and flood-related losses.
Also, the Cyclone Pool uses strict definitions for a tropical cyclone event, providing insurance coverage for property damage from the beginning of a cyclone to 48 hours after the cyclone ends, based on definitions from the Bureau of Meteorology (BoM). As Jasper showed, cyclones that have transitioned to ex-tropical cyclones can still cause significant rainfall-related damage for days after their cyclonic status officially ends. This event definition can mean that property damage that happens outside of the 48-hour period is not covered under the government-backed Cyclone pool, and instead insurers must retain losses from related claims.
Heather Bone, CEO of Gallagher Re Australia said tropical and ex-tropical cyclones, along with associated rainfall, pose a significant risk for communities across Australia.
"However, existing risk models struggle to represent the risk fully. Many models focus solely on the wind component of a cyclone, failing to capture the range of cascading impacts that tropical cyclones can bring such as flooding and storm surge, or fail to differentiate between the causes of flood. As a result, gaps in our understanding of tropical cyclone risk make it more difficult for insurers to effectively manage their exposure to tropical cyclone activity in the Australian and Western Pacific."
Understanding how climate change is impacting rainfall levels and tropical cyclones
Researchers will compare tropical cyclone rainfall levels with non-tropical cyclone and extra-tropical cyclone rainfall, as well as study how rainfall levels have changed in that time and examine the role of climate change.
The researchers, including a PhD student and a post-doctoral fellow, will continue collaborating with the BoM and CSIRO, and other research groups.
"We are seeing, because of a changing climate, the water-holding capacity of the atmosphere is increasing. This implies that whenever we have convective systems like Tropical Cyclone Jasper, atmospheric moisture gets converged to these systems and ends up being dumped in huge amounts as rainfall," Assoc Prof Chand said.
As a result, Associate Professor Chand says, "rainfall can continue for days after a tropical cyclone has transitioned to an ex-tropical cyclone stage".
"While records of tropical cyclone tracks are complete from the declaration point, continued monitoring of ex-tropical cyclones – at the tropical depression stage – may be lacking. This creates a challenge for quantifying tropical cyclone-related rainfall for periods after which a cyclone has officially transitioned to an ex-tropical cyclone," Assoc Prof Chand said.
“However, the availability of high-resolution model data means innovative methods can be used to examine the complete track of a tropical cyclone, even for days after a cyclone has transitioned.
"This information can help quantify tropical cyclone-induced rainfall at various stages of tropical cyclones and ex-tropical cyclones, enabling more informed decisions around impacts such as flooding.”
Related reading:
Safeguarding the South Pacific's island nations from climate change
Crunching the numbers on cyclone trends and global warming
