Whatever your views on the politics of global warming, well, they have to take a back seat to this business reality: The people who get paid to assess risk — the actuaries at insurance companies — are mighty worried. They don’t care about Al Gore or environmentalists or right-wing or left-wing politics. They do care about events that cost them billions of dollars. These are people who take an unemotional, ruthless, mathematical look at risk, and they don’t like what they’re seeing, according to this Op-Ed column in The Washington Post (27 September 2007):
Ten years ago, Peter Levene, chairman of Lloyds of London, was skeptical about global warming theories, but no longer. He believes carbon emissions caused by human activity are warming the Earth and causing severe weather-related events. “At Lloyds, we feel the effects of extreme weather more than most,” he said in a March speech. “We don’t just live with risk — we have to pick up the pieces afterwards.” Lloyds predicts that the United States will be hit by a hurricane causing $100 billion worth of damage, more than double that of Katrina. Industry analysts estimate that such an event would bankrupt as many as 40 insurers.
The insurance industry cites hard evidence:
- Wildfires have increased four-fold since the 1980s, and they are bigger and harder to contain because of earlier-arriving springs and hotter, bone-dry summers.
- Storms grow ever more intense: Since the 1970s, the number intensifying to Category 4 or 5 hurricanes has almost doubled, costing insurers tens of billions of dollars.
- Increasingly destructive weather — including heat waves, hurricanes, typhoons, tornadoes, floods, wildfires, hailstorms and drought — accounted for 88% of all property losses paid by insurers from 1980 through 2005. Seven of the 10 most expensive catastrophes for the U.S. property and casualty industry happened between 2001 and 2005.