Insurance Companies On Climate Change: Don’t Ask, Don’t Tell

Great, you lived through Hurricane Sandy, now just call your insurance company. What do you mean, it’s an unlisted number? (Photo by Wavlan/Flickr)

Great, you lived through Hurricane Sandy, now just call your insurance company. What do you mean, it’s an unlisted number? (Photo by Wavlan/Flickr)

Property-insurance companies are just like politicians in that they don’t want to talk about climate change, because if they did they would be expected to explain what they are doing about it, and they aren’t doing anything about it. Unlike politicians, who seem to be getting away with pretending ignorance, insurance companies are being presented with ever more claims, that are ever more expensive, for more and more losses. To stay in business, they are finding, they have to not only appear to be doing something, which is all we ask of politicians, they are going to have to actually stop the hemorrhaging. Tricky, when you can’t admit the patient has been injured.

In the best traditions of American Free Enterprise, the insurance companies are striding forward into the far distance, girding to protect their policyholders against any risk except those which actually exist. These are some of their favorite methods:

Denial. This is the insurance companies’ version of “Trick me once, shame on you; trick me twice, shame on me.” Many, many homeowners in New York and New Jersey after Hurricane Sandy, for example, and in Virginia after Hurricane Katrina (Wait, what? Katrina hit Virginia? Well no, think of it as collateral damage.) found that they could not renew their policies. Homes that had not been damaged by these storms, or any storms, were included. Not because of climate change, of course, but because the company had decided to reconfigure the geographic boundaries of its operations. In such a way that certain, um, geographic areas are now served, if at all, by a class of insurance that costs about three times the former premiums.

Retreat. This backing away from hard-hit areas has led to a situation where, because of climate change, storm-related damages nationwide and worldwide are climbing rapidly, while the proportion of those damages covered by insurance is declining. A groundbreaking new study of the situation by Ceres, an organization advocating sustainability in business, finds the trend is 30 years old. The year Katrina hit, 40% of property losses (only 40%?!) were covered by insurance. By the time Sandy came ashore, that was down closer to 30%.

Obfuscation. It’s not that the insurance companies do not understand the nature of the threat, they employ actuaries after all. They know, for example, that 6.5 million homes in the US, worth $1.5 trillion, are subject to destruction by storm surge. And they know that stronger, more frequent storms are generating higher storm surges. So do they simply say, look, we will not insure you against losses from climate-change related weather because, well, we can’t afford to?  No they do not, for a reason I did not see coming: if they specifically exclude climate-change risks from future policies, they would be implying that the risks are covered by present and past policies, and they are scared stiff of doing that. They are even more frightened by the prospects of liability claims against big polluters who have caused climate change, by people who have suffered the effects  So don’t ask, because they are not going to tell.

Rawhide Americans will tell us to just back off, let the market decide, let free enterprise reign. We tried that. Years and years ago, private insurance companies discovered they could not make a profit selling flood insurance to idiots who built homes and hi-rises on the water. So they quit. Had we let the decision of the free market stand, our coasts would look a lot different today, and our exposure to nasty weather would be a lot less. But Rawhide Americans immediately demanded that their government do something to protect their investments and their love of looking at water.

The result: the National Flood Insurance Program, offering cheap flood insurance to the worst risks in the world for pennies on the dollar of real costs. Private companies are allowed to sell the insurance, but the federal government assumes all the risks. The result is that FEMA, charged with administering the program, is deeply mired in debt that probably never can be paid. If they had done this to health care it would be called Communism.

Is it any wonder America is sinking to the status of a banana republic, unable to protect its citizens from anything  — from rising water to spreading disease to vanishing jobs — while holding its oligarchs harmless from the ravages of their own doing.

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9 Responses to Insurance Companies On Climate Change: Don’t Ask, Don’t Tell

  1. Tom says:

    What’s even more disconcerting is that some of the climate change effects, like methane and hydrogen sulfide releases, are going higher each day and producing fun incidents like (from the Jumping Jack Flash Hypothesis site today, for example):

    Metal business hit by fire in Rotherham (Britain):
    Quote: “Firefighters dealt with a blaze at a South Yorkshire factory after a pile of titanium metal filings went up in flames.”

    Porch bursts into flame just after 1 AM, fire spreads to home, in Charlotte (North Carolina):

    Fish wash ashore dead at coastal St. George Island (Florida):

    College student, woman, 21, found dead in dorm room in Amherst (Massachusetts):

    Bodybuilder, man, 21, jumps in water to retrieve ball, next seen dead in the Brisbane River (Australia):

    Small plane crashes into picnic area on the north shore of Big Bear Lake (California), engine failure, 1 killed:
    Note: If this sounds familiar, it’s because a small plane just crashed near Big Bear Lake a few days ago too, injuring 3 people, mentioned in the 2014-10-16 update

    These and many others happen every day all over the world. We continue to keep the global gas chamber going – because that’s “normal” behavior. Industrial civilization is killing us (and most other species) off.

  2. SomeoneInAsia says:

    I actually have precious little against those who proclaim there’s no such thing as climate change, so long as they happen to live on another planet. That way they can believe whatever they like, and if they screw up their planet as a result of their beliefs, they are the ones who will have to suffer the consequences, not me.

    Trouble is, my butt happens to be sitting on the same planet as theirs.

    Talk about life being fair.

  3. bill says:

    not really seeing evidence of climate change and the list of links here in the comment section, am I missing something?

  4. Tom says:

    bill: You still need evidence? Start here:

    Climate Change Summary and Update

    Updated frequently, and most recently 23 October 2014. ** Latest additions are flagged with two asterisks on each side. **

    [Since this is a rather long read, with tons of links, you can just scroll down to]

    Self-Reinforcing Feedback Loops

    [concludes, except for the last sentence]

    It’s not merely scientists who know where we’re going. The Pentagon is bracing for public dissent over climate and energy shocks, as reported by Nafeez Ahmed in the 14 June 2013 issue of the Guardian. According to Ahmed’s article: “Top secret US National Security Agency (NSA) documents disclosed by the Guardian have shocked the world with revelations of a comprehensive US-based surveillance system with direct access to Facebook, Apple, Google, Microsoft and other tech giants. New Zealand court records suggest that data harvested by the NSA’s Prism system has been fed into the Five Eyes intelligence alliance whose members also include the UK, Canada, Australia and New Zealand.” In short, the “Pentagon knows that environmental, economic and other crises could provoke widespread public anger toward government and corporations” and is planning accordingly. Such “activity is linked to the last decade of US defence planning, which has been increasingly concerned by the risk of civil unrest at home triggered by catastrophic events linked to climate change, energy shocks or economic crisis — or all three.” In their 2014 Quadrennial Defense Review, the U.S. military concludes: “Climate change poses another significant challenge for the United States and the world at large. As greenhouse gas emissions increase, sea levels are rising, average global temperatures are increasing, and severe weather patterns are accelerating.”

  5. bill says:

    Yes we wrecking the biosphere, but the links have me scratching my head as to the role of climate in the porch combusting or the athlete drowning down under.

    I am paying attention to the fact that practices like fracking and off shore drilling are dangerous to and for us. I worked in the automobile business as a technician. After 25 years as I healed from long term exposure to petro chemicals I became acutely aware of the effects of them on my inner body. I had for the first time in my life eczema so bad that my hands itched from the time I woke till bedtime, I suffered from depression, something, by the way that three other fellow techs went through at about the same time.

    I get the fish kill as part of climate changes, and I agree we are in trouble.

  6. Tom says:

    OH! You should visit the Jumping Jack Flash Hypothesis site for DAILY lists of methane and hydrogen sulfide caused problems (from climate change effects).

    here’s the link, bill:

    (read the hypothesis summary to get the general idea)

    i’m in PA and the guy who administers the jjfh blog is in Missouri.

    Where are you, bill?

  7. bill says:

    I live in florida or as my friends and call it. floriduh.

  8. bill says:

    okay, and all I can say is holy shit the worlds on fire batman…