Insurance Companies - the Henny Pennys of Climate Change

[Phoebe Loosinhouse]

It has been reported that many home insurers are now refusing to write new policies or renew existing policies in many "coastal" areas, or, if they are writing, the cost of the new policies are double and triple the old rates.

Hmm. What would cause multiple insurers to simultaneously create these new guidelines?

Well, boys and girls, I would surmise that they must have some very scary internal reports about climate change, global warming, rising seas, and weather patterns. Since homeowner policies are usually written every year or even every six months, they must believe that it is happening RIGHT NOW or why would they turn away the chance to make even a year or half-years worth of premiums?This is no "wait and see" attitude on their parts.

A huge percentage of the American population lives within a short range of the coasts. I am now starting to wonder if those weird containment camps we have read about being built in various locations aren't staging areas for our future "weather refugees". Where are large numbers of people going to be able to relocate to suddenly and without much notice? And many of them will have little or no money or their money is tied up in their house equity.

This problem won't be confined to just coastal area either. Serious drought may cause parts of the country to become inhabitable. There are more and more strange "rain events" and micro-cells that are forming and dropping unheard of amounts of rainfall that cause flash flooding in inland areas.

Insurance companies have made the bulk of their monies for a long time not on premiums, but on investing premiums. I think they are realizing that these days they no longer want the risk of actually writing insurance - their purported reason for existing.

Not just health insurance but property insurance as well may be forced to consider a federal catastrophic underwriting program aside from the Federal flood insurance that is already in place. The fact the Federal flood insurance has limits is something I applaud. I don't think all Americans should underwrite the losses of someone who chooses to build a million dollar property on the shoreline.

If you recall previous shoreline building in eras bygone, beach "shacks" or modest cottages were prevalent (except for the ultra rich who have multiple homes anyway). Gee, do you think that was because the owners recognized that possibly these structures were subject to greater weather risks?

A possible unforeseen side benefit of the insurance industry bailing on their mandate could be to bring in an era of smaller, more environmentally conscious building as people decide that they don't want to put all of their eggs in a McMansion basket in beautiful Shoreline Surf Villas By the Pounding Sea.

Now, I want to get ahold of my insurance guy and find out where he is retiring to.

[madrchsod]

1. "risk management" magazine in 1998----the coming storm"

an article from "risk management" magazine in 1998----the coming storm...

"With a report issued in 1990, Munich Re was perhaps the first insurer to publicly show its concern about the climate change issue. They later concluded, "the insurance industry must demand that political decisions are taken on climate protection immediately." In 1994, Swiss Re stated that "human intervention in the natural climatic system could accelerate global climatic change to such an extent that society might no longer be able to adapt quickly enough....

Arkwright Mutual may have been the first U.S. primary insurer to put their views in print. Their research indicated a discernible trend toward greater flooding, and they warned, with respect to flood coverage, that "insurers must carefully evaluate their use of large limits as well as other terms and conditions." They also pointed out that other human activities such as river diversions, deforestation and land use exacerbate the growing risk of flooding...


By the mid-1990s, insurers started to appear at the international climate negotiations. In 1995, an ad hoc group of seven major U.S. insurance industry groups met with Vice President Gore to discuss the issues. In a follow-up letter emphasizing the importance of climate research and disaster preparedness, they wrote: "We share your concerns about our changing climate. . . . We do recognize that the historical paradigm we have used in the past to assess the catastrophe risk we insure must be re-examined.... We commit to explore with you and the business community the synergies between initiatives associated with alternative and sustainable energy." However, despite these initial constructive steps, few individual U.S. or Canadian insurers have made an effort to become fully engaged in the issue...


There is no single explanation for this relative lack of involvement among North American insurers. The business philosophy of European and Asian insurers appears to be more proactive and more attentive to fundamental causes and to asserting their interests-and those of their clients- in the public policy process. North American companies are far more focused on mitigating damages than on working to address the roots of problems. There is also a greater tradition of scientific inquiry among European insurers. Differences in regulation and taxation may also be a factor".

http://eetd.lbl.gov/EMills/PUBS/comingstorm.html
The Coming Storm

two other links

http://www.livescience.com/environment/051101_insurance_warming.html
Insurance Company Warns of Global Warming's Costs | LiveScience

http://www.ens-newswire.com/ens/sep2005/2005-09-13-04.asp
Insurance Companies Staggering Under Global Warming Damages



one of the most under reported stories in the last 17 years? seems no one even noticed the canary was dieing

[Phoebe Loosinhouse]

2. What a great reply! Thanks so much for the follow-up and info.

I will have to read the links a little later today, but I will be sure to.

[Phoebe Loosinhouse]

3. Evening kick. I thought this is interesting. maybe not. nt.