Climate Disasters Jack Insurance Rates Up ? Climate Denial Crock ...

Celsias: ?

There is no doubt in the mind of major reinsurance company Munich Re that climate change is increasing the severity and frequency of extreme weather events and that this will have a major impact on the insurance industry.

And just maybe, where the science has not been able to make an impact on the world taking action on climate change, just maybe money and insurance premiums ( or lack thereof ) might get the point across.

One of my little life rules is to listen to people who are smarter than I am.
Insurers employ some of the world?s smartest people to figure out what bets to make on what?s going to happen, or not happen, in the future. They have to get it right, because, if they don?t, they make a lot of bad bets, and go out of business.
Early on, in the 1990s, larger insurance companies, re-insurer giants like Munich Re,?- the insurance companies that insure insurance companies ? recognized that climate change was an existential threat to their business model.

The standard climate denier response is that

a) disasters are costing more because more people live in desirable areas where disasters occur, so individual events are more costly.

b) Greedy insurance companies are using the nonexistent threat of climate change to overcharge hapless consumers. (funny how free market tea baggers can turn on a dime and blame the damn capitalists)

The ?problem with ?a? is ? if true, we should be seeing an increase in disaster costs across the board, as much from say, earthquakes, as from extreme weather -?- as noted below.
But that?s not what we see. It is extreme weather events that are exacting the rising toll, exactly as predicted by scientists.

Moreover, the fact is, I believe in markets, and what they tell us. I believe in markets much more than the climate denialists who claim to revere the market system. If evil companies want to charge you more for nonexistent threats to your beach house ? the market will soon bring us groups of equally smart actuarial experts who will come in and undercut those prices ? and make billions by charging only for ?real? risks ? ignoring phony climate change ? because it doesn?t exist, right?

Except, we don?t see that, either.

LA Times:

Insurance companies don?t care if you believe in climate change or not: Your premiums are going up anyhow.

NPR reported?Monday that home insurance premiums are going up across the board in response to the record number of tornadoes, floods, fires, blizzards and other heavy weather that hit the country in 2011.

The piece features insurance executives at major firms such as Allstate and State Farm saying they are raising rates as much as 10%.

The president of the Insurance Information Institute, a New York-based industry association, says the weather caused about $35 billion of insured damages last year in the U.S. in events that caused a total of $70 billion in economic losses.

Climate change is not mentioned in the piece, but scientists who have been studying the climate and atmospheric conditions for decades say global warming may be contributing to more severe drought, bigger storms and increased precipitation.

The insurance execs interviewed allude to this by noting that in the past certain areas of the U.S. were targeted for higher rates because of earthquakes or frequent hurricanes or flooding. Now? There are so many disasters year upon year that the whole country is being reassessed for risk.

Transcript excerpt below

NPR:

RENEE MONTAGNE, HOST:

When it comes to weather-related catastrophes in the U.S., 2011 was a record year. A dozen disasters each caused damage costing at least a billion dollars. And one result, reports NPR?s David Schaper: those tornados, blizzards, floods, fires and hurricanes are driving up homeowner insurance rates.

DAVID SCHAPER, BYLINE: Some of the nation?s largest insurance companies, including Allstate, State Farm and Travelers, are indicating they will be increasing homeowners? and other property insurance rates as much as 10 percent this year, and it?s largely because of what happened last year.

ROBERT HARTWIG: 2011 was really one of the most dramatic and most expensive years in global history, as well as here in the United States.

SCHAPER: Robert Hartwig is president of the Insurance Information Institute, a New York-based insurance industry trade association. He says weather-related catastrophes caused close to $35 billion in insured damages last year in the U.S., and more than $70 billion in total economic losses.

HARTWIG: And the year was extraordinary, because it wasn?t characterized here in the United States by a single large event. It was actually a large number of more modest events, modest being one or two billion.

?

HARTWIG: We have, the last four years in a row, really seen extreme weather away from the coasts, away from seismically active areas, areas that historically haven?t got that much attention, from a modeling perspective. And that?s likely to change.

SCHAPER: So as insurance companies revise and recalculate their risk models, most of us will be paying more for property insurance coverage this year. David Schaper, NPR News.

Munich Re:

Munich Re has been analysing climate change for nearly forty years and set up the largest database documenting natural catastrophes worldwide, which now contains over 30,000 events. The database shows that the number of registered loss occurrences from extreme weather throughout the world has almost tripled since 1980. The number of flood loss events has gone up by a factor of more than three and the number of windstorm natural catastrophes has more than doubled.

Whereas the increasing losses are primarily due to socio-economic develop-ments (population growth, rising values, settlement patterns), the strong rise in the number of weather-related catastrophes can probably not be fully explained without climate change, especially as the number of earthquakes, volcanic erup-tions and other geophysical events has only increased slightly. Prof. Peter H?ppe, Head of Munich Re?s Geo Risks Research: ?It?s as if the weather ma-chine had shifted up a gear. We believe that we can already see this in retro-spect in our last 30 years? data for some regions, although the most severe impacts of global warming are still to come.?

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Source: http://climatecrocks.com/2012/01/19/climate-disasters-jack-insurance-rates-up/

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