The Environment – Climate Change and Insurance

November 17th, 2006

Some articles on the internet have recently discusses the potential cost of climate change on our economy.  As I have stated before, humanity should start taking out insurance against global climate change by actively pursuing ‘alternative energy programs’ and actively reducing our current emissions of climate change particulate such as carbon dioxide by enforcing cleaner air standards in our cars and power plants.  Most of us personally hold insurance in our daily lives on our health and even our inevitable death.   Why should society not start insuring against the statistical probability that global climate change is happening and will severely affect our society. Even if you disagree with the science of global warming, taking out insurance against the probability, no matter how small that probability may be, would both create new industries and jobs and protect our future.  Below are some excerpts from the articles as well as links for further reading. 

Weather Disasters Could Cost 1 Trillion Dollars in a Year” by Richard Ingham

“Driven by climate change, weather disasters could cost as much as a trillion dollars in a single year by 2040, financial experts warned at the UN’s conference on global warming.  ‘Most insurance and re-insurance companies have no doubt that the rising tide of losses from weather-related disasters is linked with climate change,’ said Thomas Loster of German reinsurance giant Munich Re on Tuesday.”

Action Needed on Global Warming” by Jeremy Siegel, Ph.D.

“Some of the changes wrought by global warming are favorable. Warmer temperatures increase the growing seasons in Canada and Russia and reduce heating costs in northern climates. However, global warming also increases tropical storms and droughts and could disrupt the Gulf Stream that warms Europe. On balance, the above consequences are negative for the world economy, but not substantially so.

However, there is one consequence of global warming that could be absolutely catastrophic: a significant rise in sea levels due to the melting of the polar icecaps. …the continued increase in greenhouse emission can cause temperatures to rise between two and three degree Centigrade. If that happens the earth will be as warm as it was three million years ago when the seas were between 15 and 35 meters higher than today.

If this pattern continues, the seas could be 10 feet higher in a mere 60 years. Of the five largest cities in the United States (New York, LA, Chicago, Houston, and Philadelphia), only Chicago and my own Philadelphia would not be seriously impacted.

There may be only a very small probability that a worst-case scenario that I painted above – the flooding of the world’s coastal regions – will occur. But that’s precisely what insurance is all about. Is it not worthwhile to take necessary measures today to significantly reduce the possibility of this event?” 

Entry Filed under: The Environment

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