Francesca Rheannon in Reuters: …[M]ost victims of extreme weather disasters are more likely to call on their insurance companies instead of the Lord for relief. So far, homeowners in western Massachusetts have filed insurance claims totaling a record $90 million with the final number expected to rise. The claims from wildfires, floods and tornadoes are likely to set records in other parts of the country, as well. The Joplin, MO tornado alone will cost insurers an estimated $3 billion, with the total for the tornadoes that ravaged the Midwest expected to top $7 billion.…But how will the industry respond? The most immediate response we are already seeing are soaring premiums to homeowners and businesses. One 2009 study predicted a doubling of insurance rates due to climate change - and that was before severe weather events doubled in 2010 from 2009 totals.
Other companies are pulling out of climate-change challenged markets altogether, as the New York Times reported. "Allstate, the largest publicly traded insurer in the United States, has reduced its exposure in hurricane-prone areas and stopped writing new homeowners policies in California altogether, because of earthquake risk. It has also trimmed back its risk from inland storms." The report quoted one Allstate executive as saying, "We're running our business as if this change...is permanent...and we need to recover those costs."
Another way of recovering costs is by limiting coverage through increased deductibles, reduced limits and novel exclusions (after Katrina, some homeowners were denied coverage when their house flooded because it was claimed the damage came from the hurricane-force winds).
Insurance may well become unaffordable for millions in the U.S. and elsewhere in the developed world as premiums skyrocket. But the problem in the developing world is that many of the world's most vulnerable victims of climate change are not insured at all….
US Navy photo of Hurricane Katrina damage to Gulfport, Mississippi, in 2005
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