Global Warming already pushing up insurance premiums in disaster-prone states.
From: Psalm 110 (SwiftSword_at_Truth.org)
Date: 08/12/04
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Date: Thu, 12 Aug 2004 06:04:11 GMT
"... In a study released on March 3 by Swiss Re, the giant
Zurich-based reinsurer pointed the finger at global warming, stating
that it is the underlying cause for scores of catastrophes such as
fires and floods which have resulted in billions of dollars of damage.
The report also predicts that these events will only increase.
Why would global warming lead to more catastrophes? Swiss Re suggests
the $70 billion in catastrophic losses incurred in 2003 (including
Hurricane Isabel, flash floods in France and the forest fires in
California) are "consistent with the developments that climatologists
expect in a warmer climate." ..."
http://www.forbes.com/lists/2004/03/12/cx_bs_0312home.html
Most Expensive States To Insure Your Home
Betsy Schiffman
The next time you wish you lived in Florida, think again. The Sunshine
State may have balmy weather and great beaches, but it is also so
prone to natural disasters like hurricanes and floods that its
homeowners insurance rates are among the highest in the United
States--and may only get more expensive.
Insurance rates vary from state to state. Auto insurance is more
expensive in New Jersey than in, say, Montana. In some states,
however, homeowners insurance is rising so fast that some home owners
are being forced to cancel their policies and others to make drastic
lifestyle adjustments in order to swing the hefty increases. How bad
are the hikes? In Florida, for example, after Hurricane Andrew hit in
1992, residential property insurance rates increased over 100% in two
years' time. Home owners who paid an annual premium of $400 in 1992
might have paid $800 by 1994.
Such cases aren't rampant throughout the United States--they usually
concentrate in disaster-prone areas of the country such as Texas,
California, Louisiana or Florida. Although insurers should have cash
reserves to cover catastrophe-related losses, they are continually
revaluating the economics of insuring homes in areas that regularly
experience catastrophes. Many insurers are now predicting that
disasters once considered to be rare events are happening with greater
regularity, sending pay-outs--and premiums--through the roof.
While some of these catastrophic events are man-made--such as the
terrorist attack on the World Trade Center--many more are the result
of natural occurrences. In a study released on March 3 by Swiss Re,
the giant Zurich-based reinsurer pointed the finger at global warming,
stating that it is the underlying cause for scores of catastrophes
such as fires and floods which have resulted in billions of dollars of
damage. The report also predicts that these events will only increase.
Why would global warming lead to more catastrophes? Swiss Re suggests
the $70 billion in catastrophic losses incurred in 2003 (including
Hurricane Isabel, flash floods in France and the forest fires in
California) are "consistent with the developments that climatologists
expect in a warmer climate." Although the study paints a dire picture
for home owners, it suggests a rosier reality for the company's
shareholders because of the increasing demand for catastrophe bonds.
According to Swiss Re the volume of catastrophe bonds outstanding has
steadily increased since 1997 to a current level of approximately $3
billion. In the first eight months of 2003, the volume of new issues
was $910 million, which was nearly equal to the whole of 2002. Swiss
Re Capital Markets underwrote approximately $750 million of 2003's new
issuance on behalf of both Swiss Re and other clients.
Several climatologists and insurance industry experts immediately
dismissed Swiss Re's report as rubbish. Patrick Michaels, an outspoken
critic of global warming research and the Senior Fellow in
Environmental Studies at the Cato Institute, called the study "bunk."
"The European reinsurance companies are playing a very dangerous game.
They tend to be coddled by their governments so they don't fear
extinction, while U.S. reinsurance companies will not push for
climate-related rate increases, and they are going to get more
business because their rates are going to be lower," Michaels says.
Moreover, it's been a good year for the insurance industry, in spite
of the dangers of global warning. Swiss Re announced in August, the
last period for which it reported, that it had seen first half net
income rise from CHF 118 million (approximately $86 million) to CHF
691 million (approximately $504 million). Much of that growth came
from its Property and Casualty group, which issues its homeowners
policies.
At Allstate (nyse: ALL - news - people ), the second-biggest issuer of
homeowners policies in the United States, fourth quarter (2003)
operating income was up 71% over the same period last year. And in his
annual report, Berkshire Hathaway (nyse: BRK - news - people )
Chairman and Chief Executive Officer Warren Buffett, whose company
owns Connecticut-based reinsurance giant General Re, among others,
stated that: "It was a terrific year for our insurance business, but
the big boost that gave to earnings was largely offset by the
pathetically low interest rates we earned on our large holdings of
cash equivalents (a condition that will not last)."
U.S. insurers may not be jumping on the global warming bandwagon, but
they agree with the thesis that we will begin to see more catastrophes
over the long-term--and furthermore, the Insurance Information
Institute (I.I.I.), a New York City-based trade group, argues that
insurance rates are bound to increase as a result.
The I.I.I. economists predict the cost of homeowners insurance will
increase 8% in 2004. The reasons for the rising cost of homeowners
insurance are higher construction costs, and "increasingly expensive
natural disasters," according to the organization's forecast.
"Global warming isn't going to suddenly destroy property all over the
earth," says I.I.I. Chief Economist Robert Hartwig. "The principal
reason for more erratic and catastrophic events is that people are
concentrating in areas that are prone to disaster. If Hurricane Andrew
[which cost an estimated $20 billion], for example, had hit in the
1930s, it wouldn't have done nearly as much damage. What we're seeing
is hundreds of millions of people who have put themselves in harm's
way."
The home owners who pay dearest for living "in harm's way"--based on
the most recent insurance rate data available from the National
Association of Insurance Commissioners--are Texans, where the average
premium was $817 in 2000, more than $300 above the national average.
To see the top ten most expensive places to insure homes, click below.
The averages are calculated by the National Association of Insurance
Commissioners; they were taken from 2000; and they are for
owner-occupied homeowners insurance policy premiums. They are shown in
the order of the most expensive to the least expensive. To put the
prices in perspective, the national average 2000 premium was $501.
- Next message: Psalm 110: "STUDY SHOWS POLLUTANTS FROM ASIA HANGING OVER THE US EAST COAST -- Air pollution blowing across continents"
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