The Disastrous Future of the U.S. 42 comments
an article to
-
Font Size:
-
Print
- TweetThis
The insurance industry is fighting back against the kind of articles which accuse it of price-gouging, especially when it comes to natural disasters in general and hurricanes in particular. Yesterday Munich Re held a webinar for journalists, and wheeled out a lot of statistics relating to natural disasters in the first half of 2008. And they're pretty compelling when it comes to the hypothesis that natural disasters are getting more frequent and more damaging.
Here, for instance, is a chart of H1 natural disasters in the US going back to 1980. While the number of geophysical disasters has remained very low, the number of climatological disasters has more than doubled. And it's still growing fast: the number of disasters in just the first half of 2008 was bigger than the number of disasters in any of the full years between 2001 and 2005.
The global trend is also clear:
Of course it's not just the number of disasters which is increasing: It's also their severity, and the insured losses associated with them. Here's what's happened to US thunderstorm losses in the first half of the year, going back to 1980:
These losses, it should be noted, do
notinclude any damages from the devastating Midwest flooding in June: Floods and thunderstorms are two different things, for insurance purposes.
There are similar charts available for wildfires and winter storms too, but clearly by far the biggest natural-disaster risk facing the US is hurricanes, which over the long term have historically accounted for roughly half of total insured losses. It's hard to find a climate scientist who'll claim that the risk of severe hurricanes isn't growing - even as the insured value of property on the US coast is rising fast. Insured coastal exposure in Florida, for instance, was $1.9 trillion in 2004; by 2007, that number had risen to $2.5 trillion, with total coastal exposure in the US reaching $8.9 trillion, largely as a result of the boom in construction activity.
These are enormous numbers, and help put the insurance industry's policyholder surplus of just over $500 billion into some perspective. Yes, that's an enormous amount of money. But if a hurricane hit Miami, or Houston, or New York, it's not hard to imagine how quickly the bills could add up - bills which would be paid overwhelmingly by private insurers.
Does it even make sense for private insurers to take on that kind of hurricane risk? I'm not sure. Certainly attempts to offload the risk onto the capital markets, using catastrophe bonds, seem to be going nowhere any time soon: total cat-bond issuance was less than $8 billion in 2007, and that was by far a record year. But if private insurers are to take on this kind of risk, then I can certainly understand why they'd want to raise insurance premiums in anticipation of increasing hurricane frequency and severity.
Homeowners won't like it, and regulators won't like it. But increasingly-severe natural disasters are an inevitability at this point, and they'll hit the US just as much as they'll hit the rest of the world. In other respects, the US is actually in a fortunate position with respect to global warming: Other, poorer countries are at much greater immediate risk. But when it comes to potential insured losses from hurricanes, the US is by far the world leader.
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Mike Havrilla
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
The climate models are not simply imperfect, they are worthless. They can't even do a decent job of backfitting the data they have, much less make valid predictions that can be proved. Before I subscribe to a radical CO2 reduction program (which will drastically reduce the standard of living of every person on Earth), I'd like a bit more proof that it would actually reverse the warming we've seen thus far.
"Climate change" is a political & religious movement, not science.
1) H1 Climatalogical (temperature extremes, drought, wildfire) doubling, how does that affect insurance rates in coastal areas? Any wildfire in Maryland I haven’t hear of? The Carolinas? I know there have been fire in Florida, have they burned down any cities I’ve heard of?
2) The trendline in the US thunderstorm graph doesn’t include 2006 & 2007 which would drive the trendline down significantly depending on the type of regression used. Frankly, it appears they intentionally over fit the line to prove a point. Do a simple linear regression on the line, adjust it for inflation throw in the fact that property values exploded during the last 10% of the graph and in inflation adjusted dollars I’m guessing, not much change.
3) “Insured coastal exposure in Florida, for instance, was $1.9 trillion in 2004; by 2007, that number had risen to $2.5 trillion, with total coastal exposure in the US reaching $8.9 trillion, largely as a result of the boom in construction” Frankly, I’d expect better financial analysis from an article on Seeking Alpha. Was the increase in value from building or from the bubble? Will the bursting of the bubble, with a 20-25% reduction in value reduce this number back to $2.0 trillion? If it does, does the insurance company benefit from having the same premiums but lower exposure?
4) A hurricane hit New York, what’s the likelihood? Particularly of it being above Class III after having left the gulf stream thousands of miles behind? This is a strawman argument, Nor’easters hit New York all the time, the building are built for it. Is there any record of a hurricane stronger than a class III hitting New York…..ever?
Now a word on the “sky is falling…” argument. The glaciers in Greenland have melted? The North Pole will melt this summer? It is July. After having introduced that much new water, how has the east coast escaped flooding? I live in Virginia Beach 8 ft. above sea level. If the Atlantic had risen so much as a foot, people all around me would have notice. So much on both sides is taken as gospel without so much as looking outside or at Google Earth. Seems to me that before believing someone who was telling me the North Pole was melting, I’d go look at a recent satellite shot.
Turns out, North Pole still has some ice and my house is still 8 ft above sea level. On the other hand, oil is a finite resource and isn’t renewing itself as quickly as we are consuming it. It is unethical to use up all the petroleum when there are viable alternatives. What are future generations going to think about us, when our answer to them about why we used up all of a finite resource is, “screw you we got ours?”
For more on this, see www.rightiswrongandlef...
I think any level headed person would agree that reducing any pollutants would be good. The only answer I see with 7 going on 10 billion people is to have everyone live in the stoneage or shift to powering the planet with nuclear, but this will be a 50 year shift.
If Gore or the greens seriously believed that warming was a serious problem they would be introducing 55 mph legislation and the such, this is about power and money grab. But , I have to hand it to Gore, coming up with an issue people will fall in line for based on assumptions and computer models, and a hypothosis that will take decades to test is genius.
Bottomline the insurers will be ok, the politicians need them. The govt cannot bailout disasters as the growing entitlement spending built in will eat up the funds.
PS where did the c02 originally come from; the public schools taught me it originally came from the atmosphere, sucked into plants and fossilized into fuel. Are we not returning the earth to its natural state?
Um, Thomas? You may be up to speed on statistical analysis as a science, but do yourself a favor and look deeper into the science of climatology (as well as physics and geology)-- especially vis-a-vis Greenland's melting glaciers. Hint: we're not talking about the results of a typical hot month here. Your comment doesn't even approach the neighborhood of the actual problem.
Do your research. THEN opine. That's just common sense, bud.
I didn't acknowledge it because your premise is utterly false.
But I'll entertain your silly notion. What will actually "wreck the economy" is the ignorance and inaction displayed by you ostriches. A dramatic shift in climate, despite the causes, will do far more damage than any proactive change in lifestyle. Your unsustainable status quo is at risk, man... wake up. The time to adapt was decades ago, but people with your quaint and out-of-step mindset held us back. Now is certainly not the time to dither.
All hell is just short of breaking loose. Do you propose massive shopping at Wal-mart as the solution? Personally I see it to be more sensible energy choices (particularly thermodynamic), more sensible design approaches (solar cells on shallow rooftops make more sense than high-pitched wasteful roofs decked with shingles) and more emphasis on reuse/recycling/reduct... than pell-mell lemming-like consumption.
Feel free, though, to spout further inanities. That's your right. ; )
Not that I disagree with your major points, but Hurricane Hazel hit Toronto, Ontario in October, 1954, with winds just a few mph below Category 3 strength - and that's hundreds of miles farther inland than NYC (and more than 1,000 miles after landfall).
So, it is possible, though I agree unlikely, that a Cat III 'cane could hit Manhattan.
Apparently: www.lelandtribune.com/...
Second point was not that there hadn't been wildefires in the east as Tom B seems to have deduced. In fact, that would fly in the face of the facts, since we in southeastern Virginia have been sucking smoke from a fire in the Great Dismal Swamp that has been buring for at least two months now. Rather the point was that these fire have not damaged great swaths of property that is insured. I have not checked but I am rather confident that while the Great Dismal Swamp has been buring the Insurance industry isn't on the hook for the damage. Remember this comment was in context with the article. Simply because there have been more fires doesn't mean that the insurance companies exposure has gone up in lockstep.
Ice on land is more important with regards to raising sea level because ice floats. Thus; Greenland and much of Antarctica are more key than Santa's workshop getting wet. Note that Greenland and Antarctica have much melting yet to do; they still have lots of ice. And sea levels ARE rising.
I did not say it had completely melted, Thomas-- please read more carefully and thoughtfully if you intend to participate in the discussion.
I alluded to the melt RATE increasing, a phenomenon that has even conservative scientists worried. The rate increase in the past few years alone is alarming. But instead of asking ME all the questions, here's a better idea: go to the SOURCE.
Also, sea levels HAVE risen; it's well documented. Some islanders have been evacuated due to encroachment of ocean water into freshwater supplies. However, due to the earth's irregular shape, as well as tides and other factors, the distribution is not even, so some areas don't experience the same rise. In addition, so far it hasn't been what we would term catastrophic in general.
Finally, you're flat wrong about south pole ice. Antarctica is a polar desert-- there has been no accumulation of ANY precipitation in a long, long time. And in recent years, a huge ice shelf broke off and disintegrated, which in anyone's book is a LOSS of ice. And after the shelf detached, the glacier behind it began creeping into the sea. If you truly understood this subject, you'd recognize why that is Not A Good Thing.
If you're serious about knowing what's going on, educate yourself. Otherwise, I suggest you avoid embarassing yourself with uninformed observations. Just a thought.
1) www.pubmedcentral.nih....
Actual average accumulation has been 7.3 cm per year for the last 103 years. Doesn't sound like much, but that is 751.9 cm (25 ft of accumulation). Since Antartica has an area of about 5.4 Million Sq. Mi. That's quite a bit of accumulation in the last 100 years for a desert.
Oh and by the way the accumulation has accelerated by 20% in the last 20 years.
2) bprc.osu.edu/Icecore/S...
3) cat.inist.fr/?aModele=...
Remember how my original post alluded to the fact that all you had to do was look out the window to ascertain the facts...You might want to try that.
Use observation not superstition if you want to convince people. I love the water isn't distributed evenly argument. That's a convenient way to explain why the ocean has risen in remote areas that cannot earily be observed, vs. THE ENTIRE US and CANADIAN coastline. This water must be like so many other superstitions, only the gullible, I mean the faithful can see it.
www.siv0.com/Media
So your counterargument turns out to be a straw man. If you were able to stick to the true problem, ie, the melt rate and collapsing glaciers, and then approach the subject objectively, you'd recognize the impending danger.
And sivere, you are falling for the same pseudoscientific propaganda as Thomas F. It is impossible for man not to at least *contribute* toward global warming given the changes we have wrought over the centuries, especially the last 3. When you replace natural mechanisms involved in the regulation of climate (such as massive forest tracts) with highways and urbanized areas on the massive scale that we do, you impact climate. To disregard our deep and wide impact is disingenuous... but I realize it makes many people feel more comfortable about their short-term thinking and net-wasteful lifestyles.