Climate Change Drives Up Insurance Rates, Drives Away Insurers
by Jasmin Malik Chua, Jersey City, USA on 11. 5.07
Photo credit: dystopos
Homeowners and businesses in coastal states are finding it increasingly difficult to afford—or, with many insurers packing up and leaving, even obtain—insurance, especially in a warming post-Hurricane Katrina world, according to a report by Environmental Defense.
In "Blown Away: How Global Warming Is Eroding the Availability of Insurance Coverage in America's Coastal States" (PDF), the non-profit notes that, with record losses and payouts that far exceed premiums of late, insurance rates are doubling or even tripling. Some companies are taking a more extreme tack: Allstate, one of the nation’s largest insurance providers, for instance, has cut off coverage for 40,000 coastal homeowners in New York, and is no longer writing any new policies in Florida.
Until the federal government confronts the worsening situation of climate change, says the group, this trend will continue.
"We need a cap on greenhouse gas emissions"—and to give businesses time to plan how to reduce emissions, Melissa Carey, a climate change policy specialist with the group, told reporters during a conference call.
"Climate change is not something we're going to be able to sort of manage away," Carey said. "At a certain point, you're not going to be able to put the coastal states up on stilts or build a big seawall to protect Florida from sea-level rise." ::Deseret News
environmental defense is talking out of its you know what.
the reason insurers are leaving is that property values have gone up by 10x in some coastal regions, while insurance premiums have not (and cannot) keep pace. so if there's a big storm, they lose bizarre amounts of money--this is a gigantic problem in florida, the gulf and atlantic coasts. global warming doesn't have a frig to do with it--what, did storms not happen in the 18th century?
Actually, Environmental Defense is right on... and I'm pleased to see this type of coverage go a little more main-stream. I'm in a cutting edge class in law school right now called Climate Change Litigation. We don't have a textbook, because there is no text book on climate change litigation available- it's just that new. We are working with a non-profit organization called the Western Environmental Law Center, and we are each assigned an area of emerging climate change law, and we have to come up with a brand new way to sue in these different areas to help combat climate change. I was assigned to insurance, and at first I was skeptical. What does insurance have to do with anything? Naturally, I assumed insurance companies would just raise their rates to deal with the increase in payouts. I WAS WRONG. Climate change has rocked the world of insurance companies- world wide. The amount of conversation time that is being devoted to climate change among the industry is unbelievable. Climate change is threatening to destroy our idea of insurance as we know it. And yes, many many people are not able to afford insurance coverage because of climate change, and we are going to see that increase drastically, even in the next few years.
I think your idea about property values increasing is novel and interesting. Yet, it is unfounded, I promise. There were storms in the 18th century- but not like this. Throw in California's fires (billions of dollars in clean-up), which the insurance industry is still scrambling to recover from Katrina. Then consider the payouts because of the changing wine industry, other types of important agriculture, serious drought in Southern states, the skiing industry.... the list goes on and on and on. Insurance as we know it is going to change, perhaps even more quickly than the climate does.
The authorities can´t do something to regulate this? The man cannot influence the natural changes.