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Industry Begins to Ponder Role of Climate Change

In browsing around today, I ran across a report from Reuters about insurers struggling to factor in the growing risks from climate change. The article was in specific reference to the massive floods in Australia and Brazil, but what caught my eye was that the industry, unlike our politicians and even our scientists, are very practically just accepting the obvious. Something is massively up with the climate.

As the article pointed out, a warmer world means more flooding, more droughts, rising sea levels, cyclones — basically things happening in your part of the world that just haven’t happened there before. In Texas, for instance, our already hot summers are now blistering hot, with the number of consecutive days of more than 100 degree temperatures climbing each summer. That’s harder on cars, harder on roofs, and harder on people with health problems.

How do we begin to translate these kinds of changes into our personal insurance pictures? It may mean we need to consider types of catastrophic coverage that haven’t been relevant before. One of the most measured statements in the article was from the SEO of an insurance company in Singapore.

“I believe climate change will add something to the losses we see already but I don’t believe losses will be dramatically changing. It’s just going to make the losses worse.”

So. If you live in an area that has traditionally flooded every ten years, you may want to ask yourself, if that’s becoming five. Did the water get just “that” much closer to your back porch last time? Do you want to risk it coming in the back door next time? How many tornados did your area have last year compared to the year before? Do you need wind coverage? Will your present homeowner’s coverage take care of a corner of the garage getting blown down the road?

Always remember that insurance is a matter of risk assessment on your part as well as on the part of the company itself. You know where you live and you know what’s likely to happen.

You may want to take a cue from the fellow quoted in that article on mine subsidence I wrote about Monday. He said his home was 60 years old and in 60 years there had been no mine subsidence in his area, yet he bought the insurance. Why? Because it could happen and all the factors were there for it to happen.

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