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Insurance Industry Looking Hard At Climate Change
A recent paper in Science (abstract) examines the insurance industry's reaction to climate change. The industry rakes in trillions of dollars in revenues every year, and a shifting climate would have the potential to drastically cut into the profits left over after settlements have been paid. Hurricane Sandy alone did about $80 billion worth of damage to New York and New Jersey. With incredible amounts of money at stake, the industry is taking climate projections quite seriously. From the article:
"Many insurers are using climate science to better quantify and diversify their exposure, more accurately price and communicate risk, and target adaptation and loss-prevention efforts. They also analyze their extensive databases of historical weather- and climate-related losses, for both large- and small-scale events. But insurance modeling is a distinct discipline. Unlike climate models, insurers’ models extrapolate historical data rather than simulate the climate system, and they require outputs at finer scales and shorter time frames than climate models."
God forbid someone actually get some actual benefit from their insurance...
If you want news from today, you have to come back tomorrow.
We've had a bunch of climate related stories on /. lately. My theory is that when IPCC AR5 comes out officially, the jig will be up. The alarmists are having to make hay while they still can.
For the blessed few who haven't been following the climate wars, IPCC AR5 is the United Nations latest report on global warming. It has several important findings including that shown in Figure 1.4 . The global climate has warmed less than all the IPCC's previous projections. They also conclude that the global temperature will warm about an additional degree in the 21st century. Dry places will get slightly drier. Wet places will get slightly wetter. Extreme weather events will not be more extreme or more frequent. Catastrophic anthropogenic global warming has been cancelled.
http://wattsupwiththat.com/2012/12/14/the-real-ipcc-ar5-draft-bombshell-plus-a-poll/
Global warming has already been forecast http://en.wikipedia.org/wiki/Stern_Review to cost much more than slowing it down/preventing it would cost.
I guess those externalities in economic models (and fossil-fuel price and fossil-fuel-based product prices) weren't so external after all.
Who would have guessed that the economy is a wholly owned subsidiary of the environment?
Where are we going and why are we in a handbasket?
Finally, we are about get some science that is not tied to advancing some political cause, political party, or some religious belief for or against Gaia.
The CAGW graphs from models have repeatedly failed to predict current temperature trends, and others, like global methane in the atomosphere. Data has been repeatedly unused, misused and misreported in CAGW pal reviewed "literature". CAGW is a scam and pseudoscience. Go listen to Feynman about missed predictions. Get over it.
Insurance has been raising for a couple of years as there is an increase of natural disasters that are purely related to the weather.
Regardles of the who and what, but the climate is changing noticable. Normally at these part in this time of year it is freezing but now we are getting temperatures in the range of 15-18 degrees. We also have more floods then in the previous years. It may be warmer, but we also have a lot more rain.
...using climate change as an excuse to raise rates? A win-win.
If the scaremongers are right, they cover possible extra expenses... which have not - in any sense - shown up. No extra bad weather, hurricanes, et cetera. Just higher payouts from covering more people.
If they're wrong, the insurance companies get more money for free, and they get the environmental folks to help them get the rate increases approved from various government entities.
"We need to raise our rates to allow for extra payouts from climate change."
"Do we get a refund if you don't have to pay out more?"
"No. But don't you feel better knowing that we might?"
You mean actuaries, and they are.
This is how you do science: you repeat the method to test the hypothesis. The article hints at what these adjustments entail:
This is similar to Hansen's 1987 (iirc) papers, which were based on a random prediction of a volcanic eruption in a particular year but it turned out to guess the year wrong. Predicting such events, which have a short term effect on the climate, is a guessing game. The numbers were pretty close, but if you repeat the method and replace the projections of CO2 emissions and aerosol emissions from volcanic and other sources, then they end up spot on.
These days, with more computing power available to run more detailed models more times, they do many model runs with a the random natural factors, and end up with a spectrum of results. This allows confidence intervals to be achieved. Hansen, in 1987, didn't have the resources for that; just like Sverre Arrhenius certainly couldn't do that when he estimated a 2C climate sensitivity from his manual model runs in ~1897.
The main problem is not climate change, but rather poor judgement of what to build where. A beachhouse used to be within minutes of the beach, now it is directly on the beach and the building is a lot more expensive. This means the risk of damage is not only greater than it used to be, it is also more expensive when it happens.
Another problem is draining. Swampland is drained and houses are built there. However nature intended such places to be swamps and they tend to reappear when exposed to heavy rain.
Land is claimed from rivers, making them narrower, which prevents heavy flow. When rain makes heavy flow needed, waterlevel raises instead and causes floods, often just before the block, which means the owners of the flooded houses wasn't the one to make the mistake. This was the main problem with the flooding in Germany and Czech Republic in the 90's as well as the major Mississippi flooding.
There is a pretty good example of this on the street where I live. Houses were built on all free plots in the 1950s, except one. This one vacant plot didn't have any house on it until the late 1980s. Turns out that whenever it rains heavily, a lake fills up, sends all the water over the top of the hill, down to the road and then it travels on roads all the way to the ocean. The problem is that whenever the water goes downhill it goes through this new house and no amount of dams and ditches appears to work. It has been flooded twice in the last 10 years alone and none of the other houses have ever been flooded. One has to wonder why this plot was left unused in the first place.
Another fine example is a train repair shop built recently in a moist plot with a stream nearby. The politicians forced the engineers to make the building lower than the engineers recommended because otherwise the roof would be too tall compared to the trees and that wouldn't look nice. Now it has to use a pump to keep dry and they will have water on the floor if the pump stops and they fail to restart it within a certain amount of hours. I bet it completely fails the flood resistance demands set by the same politicians.
Such poorly protected (and often expensive) buildings is a major concern for insurance companies. It's a far greater issue than climate change. However it might be a whole lot easier to get everybody to pay more if it's stated that it's due to climate change than if it goes to "poorly located houses".
Another interesting note about this is one "proof" of climate change is the increasing amount of money paid by insurance companies. Those numbers can't be used to proof worse weather because you can't isolate the costs for climate change and the costs caused for the reasons I mentioned here.
Insurance needs fear to sell.
No it doesn't. People buy insurance because MOST don't have enough funds to cover things like car crashes, unexpected serious illnesses, etc. . These things happen and the LOGICAL response is to be prepared for them. At worst, that could be considered cautious.
However here is a fear that is irrational Climate change the climate always changes, day to day , year to year, century to century.
Weather != Climate. Climate changes TYPICALLY happen over 100's to 1000's of years, sometimes even longer. And the impacts of those changes on the life forms existing on the planet depend on how string and how fast those changes happen.
The changes, as indicated by all the research, observations, and data we have show that the climate is changing, and rapidly (decadal scale). There is no irrational fear here. The science says A is going to happen, evidence shows A is happening, and that there are consequences for A happening. Groups that are interested about these consequences and what their effects will be such as the DoD, DoE, insurance companies, agribusiness, etc. are incorporating the science into future plans to prepare for it.
And the difficulty will be was the damages caused by climate change or were you in a flood zone anyway.
What your describing is called attribution, an it's pretty easy to filter out such basic cases. Attribution of weather event to climate change is more difficult, but that's another matter. As water levels rise, flood zones will increase (at least in coastal areas). Storm surges will become more dangerous and travel further inland.
That's just an example, but these are things city planners and others need to be aware of when making long range plans. Otherwise, when those 1 in a thousand year events start becoming one every ten years there's going to be a heavy bill to pay.
and fearful governments afraid of being sued are complicit in this. A recent example I have is a local council declaring a flood zone in an area that would only flood if sea levels rose 2-3 metres insurance companies without question simply rose all premiums in the area $3000 -$7000 if you wanted flood insurance.
You don't seem to understand coastal flood zones very well. Storm surges, even those not driven by hurricanes, can easily exceed 2 or 3 meters. Even coastal winds can drive waves that size depending on where you live. And if such events have been shown to be happening more frequently in your area due to a combination of increasing extreme events, ocean rise, coastal erosion, etc. then it only make sense.
It did have an effect as people in this area were generally concerned about climate change now many I spoke to have seen the money maker it really is
You're going to need more than emotional appeal to win an argument. You have to get some real hard data and show WHY you think the increase is unnecessary. How often does the area flood? How much value does the area have? What is the projected increase in flooding events as sea levels rise? What is the projected increase of conditions that would lead to probable flooding? Insurance companies use a lot of information to estimate risks and determine premiums. If you don't have a solid provable case you basically just whining that your premiums had to go up to cover the increasing risk due to a changing climate.
This shouldn't be a surprise to you, as scientist have been saying these types of things would likely happen 30 years ago.
~X~
....had nothing to do with "climate change" or "global warming" or whatever the AGW supporters are calling it this week. Even the climatologists said as much:
http://newswatch.nationalgeographic.com/2012/12/07/csu-researchers-say-sandy-wasnt-influenced-by-global-warming/
Ferret
Sic gorgiamus allos subjectatos nunc
Oh look, I found an interesting discussion about that very post from John Christy of UAH, posted on notorious denier Roger Pielke Jr's blog. The great thing about blogs as compared to scientific journals is that you get to choose your "pal review"! Who will notice if you mis–represent the original data, and use a flawed dataset?
One comment really nails it, and I can't link to it individually, so I'll just include it here: