Insurance And Climate Change: A Matter Of Policy

According to a recent study by the Ceres investor coalition, U.S. insurers have seen a 15-fold increase in insured losses from catastrophic weather events in the past three decades -- increases that have far outstripped growth in premiums, population, and inflation over the same time period. The study, Availability and Affordability of Insurance Under Climate Change: A Growing Challenge for the U.S., warns of larger financial losses in the years ahead if climate change trends continue and no actions are taken to face the challenge. The investor demand comes on the heels of devastating back-to-back hurricane seasons in the U.S. that caused a record $30 billion in insured losses in 2004 and as much as $60 billion in insured losses from Hurricane Katrina alone in 2005. Worldwide, the $200 billion in damages cited by Munich Re significantly exceeded the previous record of $145 billion set in 2004. More than $70 billion in 2005 losses were covered by insurance companies, compared to some $45 billion in damages last year, according to the Foundation. The insurance industry has reason to be worried about such trends. A study in June (PDF) by the Association of British Insurers found that climate change could increase the annual costs of flooding in the UK almost 15-fold by the 2080s under high emissions scenarios. If climate change increased European flood losses by a similar magnitude, annual costs could increase by up to $150 billion. http://www.huffingtonpost.com/joel-makower/insurance-and-climate-cha_b_12083.html [Proofreader's note: this article was edited for spelling and typos on December 14, 2005]

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