Insured destruction: global climate change threatens the insurance industry

• Published in: E (Norwalk, Conn.) Vol. 13; no. 4; pp. 16 - 17
• Main Author: Schulman, Audrey
• Format: Magazine Article
• Language: English
• Published: Norwalk Earth Action Network, Inc 01.07.2002
• Subjects: Disasters; Environment; Global warming; Hurricanes; Industry; Insurance industry
• ISSN: 1046-8021

"The world is warming," Loster says, adding that water evaporates more quickly in hot weather. Faster evaporation means more intense droughts, as well as more extreme rainfall, especially near mountains where humidity being forced up into colder air creates rain. "Rainfall in the mountains means landslides and flooding in the valleys," he says. Climate scientists also note that hurricanes can only survive over water at temperatures of 80 degrees Fahrenheit (F) or warmer. As the oceans warm, hurricanes are created in more places and travel farther. When a hurricane hits a place that hasn't had them before, the losses are more extreme because no person or building is prepared. The world's average temperature has warmed less than half a degree F in the last 100 years, but it's projected to warm as much as five degrees by 2050. At that point, New York would have the same average temperature as today's Miami, and it would be just as prone to hurricanes. Neither the government nor the insurance industry is fully prepared for the impact of a series of catastrophic natural disasters. To paraphrase an insurance executive, we're like a person falling from a 30-story building, saying, as each floor whips by, "So far, so good." CONTACT: Federal Emergency Management Agency, www.fema.gov/pte/prep.htm; Lawrence Berkeley National Laboratory, "Insurance Loss Prevention and Risk Management," www.eetd.lbl.gov/CBS/insurance/cifram.html; Reinsurance Association of America, (202) 638-3690, www.raanet.org.