Hurricane Damages SOAR to New Levels
As an update to my posting last week on climate refugees, my colleague Janet Larsen, Director of Research at Earth Policy Institute, reports that "damage from hurricanes is soaring off the charts, bankrupting insurance companies and depriving property owners of insurance in high-risk areas". During the 1960s, worldwide damage from windstorms with economic losses of $1 billion or more totaled just $4 billion. In the 1970s the figure rose to $7 billion, and in the 1980s it topped $24 billion. Next came the 1990s, when hurricane losses soared to $113 billion. Then between 2000 to 2005 hurricanes left a staggering bill of $273 billion".According to Janet's report, "two trends are largely responsible for the growing costs of windstorm disasters. One, rapid coastal development is bringing more people and more expensive infrastructure into vulnerable areas. And two, hurricanes are growing stronger and lasting longer, fueled by higher sea surface temperatures. They are also widening their geographic range, invading areas previously considered safe from the wrath of windstorms.
"The recent spate of powerful hurricanes in the southern United States has put many insurers out of business or into liquidation, leaving customers scrambling to find new coverage, an increasingly difficult endeavor. Many hurricane-prone property owners are facing a doubling or tripling of insurance rates over the next several years. The world's largest insurer, American International Group Inc., is no longer taking on new policies in some Gulf Coast communities. Allstate, one of Florida's largest insurers, dropped 95,000 policies in 2005 and plans to drop an additional 120,000 this year. As state or federal insurers jump in to cover properties that private companies will no longer touch, essentially subsidizing development in risk-prone areas, they often incur large deficits that someone, generally the taxpayer, must cover.
"Allstate is dropping 28,000 of its New York policyholders as well. Neither Allstate nor MetLife will take on additional customers on Long Island, New York, the direct target of the legendary 1938 hurricane. According to AIR Worldwide, a risk-modeling and technology firm, a Category 5 storm hitting the New York area today would incur $96 billion in losses. In Miami, a storm of that strength would rack up a bill of $155 billion.
"More than 40 percent of the U.S. population resides in coastal counties, many of which are growing fast. The country's most rapid population growth has been in Florida, the state most at risk from hurricanes.
"One in every 10 people on the planet lives in an extremely vulnerable zone within 60 miles of a coastline and less than 33 feet above sea level, and more people seem to be heading in that direction. In developing countries, where insurance now covers less than 2 percent of the costs of "natural" disasters (compared with the United States, where half are insured), hurricanes can set back development by decades. When Hurricane Mitch hit Honduras and Nicaragua in 1998, for example, it took more than 11,000 lives and left a destruction bill exceeding the two countries' gross domestic products.
"At some point, the human tides may turn and more people may move inland, as we have recently seen with the abandonment of communities ravaged by Katrina. In the meantime, the question becomes not whether we can afford to reduce the carbon emissions that are raising the earth's temperature, but whether we can afford not to."
For some suggestions on how to cut carbon emissions quickly and still win out economically, see Chapter 10: Stabilizing Climate in my book Plan B 2.0: Rescuing a Planet Under Stress and a Civilization in Trouble.