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Stanley A. Changnon and Joyce M. Changnon

Abstract

Historical hourly rainfall data (1950–84) were subjected to spatial and temporal analyses to provide information for developing rainfall insurance rates for the contiguous United States. The dimensions of the study illustrate a balance between insurance needs, funding, and adequate climatic analyses. Assessment of the hourly rainfall data from 2092 stations in the United States revealed that only 211 had data deemed useful to this study. Seventeen regions with similar probabilities of rainfall (rate areas) were defined. The average patterns of hourly rainfall closely resemble the nation's average annual precipitation pattern. Separate seasonal rain-hour probabilities were defined throughout the United States because of marked differences between wetter and drier portions of the year. Temporal analyses of rain hours defined the length of record to use in rate determinations, and how often new rates should be calculated. Long-term trends were not present during 1950–84 in any area, and 78% of the 5- and 10-year values were within ±5% of the long-term average, reflecting generally low interannual variability; however, 15% of these short-term fluctuations deviated greatly (>20%) from average. Results led to the recommendation that rerating should be done once every 5 years in most rate areas and that values of the most recent 25 years should be used for rating. Analysis of in-day hourly rain probabilities revealed major diurnal differences existed during the wet seasons in the central and southeastern United States, and different (night and day) rates were recommended.

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Stanley A. Changnon and Joyce M. Changnon

Abstract

There are three major types of crop-related weather insurance: hail, all perlis, and rain insurance. The development of rates is an exercise in applied climatology, and the importance of the historical data selected for assessing risk (and developing rates) is revealed by the problems encountered by firms insuring against deficient summer rainfall during the drought of 1988. Extensive purchase of premiums costing $9 million for coverage ($400 million) in the Midwest occurred with buyers (farmers) apparently aware during May and June 1988 that an unusually dry event was in progress. The levels of loss (50% or less of average June-August rainfall) offered by insurance firms were exceeded throughout the Midwest. The firms attempted to refund the record number of premiums accepted in June, and in turn, 8000 farmers filed a class-action suit against the firms for failure to accept premiums and to provide coverage. The insurance firms ultimately settled by agreeing to pay $48 million in claims. The coverage offered was based on the most recent 25 years of data, and this unusually wet period did not represent the longer-term likelihood of areally extensive dry summers. Uses of climatic data by the insurance industry include planning for the occurrence of such extreme event considerations, plus point vs area probabilities of these anomalous events; choosing the periods to select for routinely establishing new rates (rerating is typically done an 2- to 10-year cycles); and for determining the averages most appropriate to use for rate levels and sales considerations.

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Stanley A. Changnon, Joyce M. Changnon, and David Changnon

The uses and potential applications of climate forecasts for electric and gas utilities were assessed 1) to discern needs for improving climate forecasts and guiding future research, and 2) to assist utilities in making wise use of forecasts. In-depth structured interviews were conducted with 56 decision makers in six utilities to assess existing and potential uses of climate forecasts. Only 3 of the 56 use forecasts. Eighty percent of those sampled envisioned applications of climate forecasts, given certain changes and additional information. Primary applications exist in power trading, load forecasting, fuel acquisition, and systems planning, with slight differences in interests between utilities. Utility staff understand probability-based forecasts but desire climatological information related to forecasted outcomes, including analogs similar to the forecasts, and explanations of the forecasts. Desired lead times vary from a week to three months, along with forecasts of up to four seasons ahead. The new NOAA forecasts initiated in 1995 provide the lead times and longer-term forecasts desired. Major hindrances to use of forecasts are hard-to-understand formats, lack of corporate acceptance, and lack of access to expertise. Recent changes in government regulations altered the utility industry, leading to a more competitive world wherein information about future weather conditions assumes much more value. Outreach efforts by government forecast agencies appear valuable to help achieve the appropriate and enhanced use of climate forecasts by the utility industry. An opportunity for service exists also for the private weather sector.

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Stanley A. Changnon, Wayne M. Wendland, and Joyce M. Changnon

A group of atmospheric scientists, members of two midwestern AMS chapters, were polled in 1982 and in 1992 about their perceptions of current climate trends and the climate-change issue. Most correctly assessed the recent trends in climate conditions, aware of the cooling-wet trend with considerable seasonal weather variability prior to 1982, and most were aware of the warming trend in 1992. In both 1983 and 1992, a large majority of the respondents believed that information being presented about the climate-change issue was generally confusing to them and to the lay public. Half of the respondents in 1992 believed that evidence that a change in climate will occur is convincing, whereas in 1982 only 20% believed that evidence was convincing. In response to the question about whether the enhanced greenhouse effect on climate had begun in 1992, half said yes and half said no.

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