Footprints Insurance Industry could be Bankrupted
There is a real possibility that insurance companies will either go broke from more catastrophic droughts and storms, or have to so increase their policies that they will put themselves out of business. Either way the future of the industry is not looking good – something their recognize themselves.
$1,500 billion of Australia’s wealth is locked up in homes, commercial buildings, ports and other physical assets. The insurance industry currently underwrites the risk to the bulk of them from weather events. Climate change threatens its ability to continue this in the future.
Therefore the impact from climate change is quickly becoming a social and political issue, as well as an economic one.
The range of large losses is growing. These include infectious diseases such as malaria and Nipah virus, urban heat catastrophes, aeroallergens such as pollen, crop damages from pests, coral bleaching and consequent vulnerability of human settlements to tidal surges, super-infestations of forest pests and elevated wildfire risks.
In the European heat wave of 2003 when temperatures rose six degrees above the norm there were some 35,000 fatalities and uncounted hospitalizations, as well as nuclear power plant shutdowns due to the raised water, massive crop losses, and wildfires. Little of this had been expected. All of this had to be paid for.
The graph shows that over the past 15 years global insured losses from weather-related events have rapidly moved upward. Among the 40 largest during this time, only 3 have NOT been weather related.
Insurers cover less than one third of these losses.
The rest is carried by you and me.
Over the past few years losses have been escalating exponentially
- There were four times as many natural catastrophes in the 1990s as there were three decades ago.
- Worldwide total economic losses (insured and uninsured) from catastrophes are doubling every 10 years and if trends continue annual losses will reach $AUD.200 billion by the end of this decade.
- Insured losses from natural disasters are 15 times higher today than they were in the 1960s, even after adjusting for inflation. These have far out-stripped premium increases, inflation and population growth.
- Crop insurance losses have grown 10-fold in recent decades
- Liability insurance could rise because directors of some companies could be held responsible for climate change.
- 11 insurers became insolvent after Hurricane Andrew in 1992.
- The total dollars paid out in natural disaster-related claims since 1990 is 50 percent greater than the losses incurred over all the previous 40 years combined.
- After Katrina some homeowners saw their premiums double and dozens of insurers stopped writing home policies altogether, even after substantial rate increases.
- Australian ski resorts wont renegotiate leases as they fear loss of snow .
- New Orleans’ population is now less than half of its pre-Katrina numbers.
As carbon dioxide levels double large event losses could jump to $200-$30 billion worldwide.
The environment is eclipsing terrorism as the security threat of the 21st century.
YOU can do a great deal to prevent further warming NOW
Personally and Politically