Saturday, September 15, 2012

Hurricane season reveals economic perils of ignoring climate predictions

Anna M Clark in The correlation between warming surface waters and tropical cyclone intensity has been scientifically verified. While it's unclear if climate change is causing an uptick in natural disasters, we cannot deny that the percentage of Category 4 and 5 hurricanes has increased since the 1980s. In that same period, sea levels have risen and by some estimates, they have been since 1880. Human activities such as burning fossil fuels and clearing forests release excessive carbon dioxide and other heat-trapping gases into the atmosphere, and incontrovertible evidence shows that in the past 50 years, over 90 per cent of this warming has gone into our oceans. In spite of the facts, however, a stormy debate over correlation and causation rages every hurricane season, and this year's hurricane season is no different. This debate distracts us from another inconvenient truth: underestimating climate change poses an economic threat, particularly to coastal communities.

Living in the path of a hurricane is a financially risky business. The number of US weather disasters totaling at least $1 billion in damages doubled in the past 15 years, totaling 87 disasters up from 46 disasters in the previous 1980 to 1995 period. Hurricanes Rita and Katrina alone caused $165 billion in combined damages. "Whether it's the 'new normal' or not, the industry sees a pattern of losses that's extraordinary," said Frank Nutter of the Reinsurance Association of America, quoted in this month's National Geographic cover feature "Weather Gone Wild".

Insurance market specialist Lloyd's reports that "despite widespread concerns about the affordability and availability of property insurance in coastal areas, few people are currently considering how the insurability of their homes and businesses might be affected by increases in risk due to climate change". Without adaptation to the new climatic reality, insurance losses from coastal flooding for high-risk properties could double by 2030.

But it's not the insurance companies who suffer most of those losses, it's homeowners and business owners. Already, State Farm has proposed to deny renewal of coverage on more than 11,000 Gulf Coast home insurance policies. In Florida, State Farm even tried to cash in on the crisis. After announcing that expenses from hurricanes were forcing it to drop nearly half a million customers, State Farm invested in DaVinci, an unregulated offshore reinsurance venture that would offer coastal residential policies, but at exorbitant prices...

US Army photo of flooding in Galveston, Texas, after 2005's Hurricane Rita

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