This thread is not for arguing whether global warming is real, or whether we humans are causing it, or whether our government should be doing something about it.
The insurance industry clearly believes all three of these things are true, and that the failure of our government and other nations to address climate change will lead to some serious hurting in their bottom line.
The question I have for those who don’t believe these things are true is: why would the insurance industry say they are true, if they’re not? What good would it do them to point to climate change as the cause of increased losses due to severe weather events, if climate change isn’t actually causing them?
Are climate scientists pulling the wool over their eyes? Are they being politically pressured into a ‘politically correct’ position on this issue? Are they bullshitting about climate change for obscure reasons of their own? What’s going on here?
If Global Warming is not real and legislation is passed the insurers would not be affected more than anyone else. If it is real then passing the legislation would save them a lot of money. Thus from the insurer’s perspective is there is no downside to pushing Global Warming and lots of upside.
Plus there is the corporate backside covering. If no disasters take place and the insurance companies make money then it is because of wise managment who deserve a raise. If disasters take place and the insurance companies lose money it is congress’s fault for not taking action on global warming. There is no reason to blame management.
It may be a CYA move. If they deny it and it happens or appears to happen they will have no excuses, but if they say they have paid attention to the government reports on GW and they get into trouble they can cry and get help.
Also proclaiming GW allows higher rates so there is that aspect also. If they get inspected for overcharging they can just point to the GW issues to justify it.
On their part there is more incentive to go along with GW then not to.
I’m a global warming “believer” but there are potential answers to the OP.
Consider it a form of…insurance. If you think the possibility of GW being a real problem in the near future is, say, only 2%, it might still be worth crying wolf, just in case. Because the potential costs if the worst does happen, and insurance companies must bear most of the load, are huge. Best to start now with the idea that many forms of natural disaster are international in scope and governments should pick up much of the tab.
Also making loud noises about GW might give insurance companies leverage to make standard policies less inclusive going forwards, as well as to weasel out of paying claimants on existing contracts. This is good for the insurance companies whether the climate is changing or not.
The problem is that the current Republican management in congress even denies that stampedes can happen, so there is no plan nor any investment to deal with them.
Climate change is just a political issue these days. Pretty much every objective scientist (those not paid shills of various political interests) agree that is happening and human caused. Farmers and agriculture interests, those people whose livelihood relies on the climate, know it is happening and are taking steps to mitigate its effects. Insurance companies, the military, shipping companies, fisheries, seaside communities, western water districts, all of these entities are taking steps to adapt to both the changes in the climate that has already happened and those that are projected. None of them are being untruthful; they simply know where their bread is buttered and are protecting their interests.
You might have missed the part quoted in the OP about it happening already. If the situation were normal and they wanted to raise their rates to deal with upcoming GW, I could see your point, but they’ve already gotten clobbered.
To answer the OP, perhaps the bad weather is just a coincidence and the insurance companies don’t know how to calculate the odds of something like this happening without GW.
There is a big difference between “human caused” and “human influenced.” I don’t think any rational person with an understanding of the issues can deny “human influenced” but “human caused” is a far stronger term and if people have even read 1 or 2 of the serious published works on this (and I don’t mean articles from blogs, Scientific American, CNN, or even skimming abstracts or a few pages from the IPCC reports, I mean actual published peer reviewed scientific articles) then you will quickly realize unless you are literally a climate scientist you aren’t anywhere close to qualified to even articulate the scientific consensus as “human caused” vs “human influenced.”
My job is to insure things for real or imagined damage. If a man lived on a massive hill as an insurance salesman I’ll sell that motherfucker flood insurance if I could.
Why are insurance salesman suddenly pillared as moral or factual authorities?
Actually the real answer to the OP is from the perspective of actuarial science insurance companies don’t need to understand climate change, and they probably don’t have any special understanding of it. All they have to be able to do is plug increasing weather related claims into their actuarial calculations and adjust accordingly.
The insurers know that the math shows a trend towards higher claims per storm season, but the insurers aren’t any sort of authority on why that happens because it really doesn’t matter why to them. In fact it goes against the concept of actuarial science to be too concerned with cause-effect like that. Remember their inputs are factual events that have already happened, and their science doesn’t rely on them actually being able to know why something is going to happen. If insurers had to know the specific brain chemistry differences between men and women that lead to young men being a higher auto insurance risk than young women they’d be out of business, luckily they just need to know that men are a higher risk and respond accordingly.
But, since the ideal is a competitive market, the next guy will sell the customer flood insurance for less. Ultimately, it would be so cheap as to accurately reflect the likelihood of a flood.
Moral, no, but actual – or actuarial – yeah. Their existence depends on making really good assessments of risks.
Again, it’s only an ideal, but in a free and competitive market, their “morality” should be self-regulating, because, if one company is ripping off their customers, the next company should come along and undercut their rates.
Add in government regulation, and it’s hard for insurance companies to be too grossly immoral.
Well, they may make that claim, but if they do so thy have no evidence for it. Plenty of people have looked for this evidence of climate change causing natural disasters, and it just ain’t there.
Insurance payouts for disasters are increasing of course, simply because population is increasing. But once you control for population increases and expansion of development, there’s no evidence of increased disasters.
The insurance industry is well aware of this, which is why premiums haven’t increased.
Is this a serious question?
It gives them an excuse to push up premiums
It gives them an excuse to push for legislation limiting their liability.
It costs them nothing, and it might save them a few bucks, so why not do it?
It increases perceived risk, and insurance is nothing more than convincing people that their risk is higher than the amount they are willing to pay to prevent it.
It produces an atmosphere where regulators, courts and the public are more likely to tolerate their usual shenanigans of refusing to pay based on technicalities, dragging their heals on assessments and so forth.
Insurance salesmen are not climatologists, so why does their opinion matter at all? TheIPCC tells you that hurricanes have become rarer and less severe globally and NOAA tells you there hasn’t been any increased frequency of hurricanes in North America and that intensity has decreased. An insurance salesman says that hurricanes have become “more severe, longer, more frequent”. Why do you believe the insurance salesman? What does it matter what an insurance salesman believes when that belief contradicts the foremost scientific authorities? Does it matter whether he is making making these declarations out of ignorance, or for profit or for political reasons? Isn’t the only important point that the declaration is factually incorrect?
I could keep going, but isn’t this enough?
I really do have to echo Sitnam’s response. When did we suddenly start holding insurance salesmen to be the pinnacle of ethicality and honesty?
No, because climate scientists aren’t agreeing with what they say. There is debate about whether climate change is having any effect on disasters, but there is no clear evidence to that effect whatsoever. There is no dispute that when disasters occur they cause more monetary damage. The floods in Australia last year for example were about 10x more damaging than anything in history. But teh actual water levels and water volumes aren’t any higher than they have been a million times before. The increased cost was entirely attributable to their being more assets to be destroyed.
Unless you are seriously saying that global wealth and infrastructure has increased due to climate change, there is no link between climate change and increasing costs of disasters.
Why does it matter? If what they are saying is provably untrue (as in their claims about increased frequencies and intensities of hurricanes) or without basis (as in their claims about droughts becoming more severe), why does it matter *why *they are saying it?
No, their rates and their coverage reflect the likelihood of danger in the minds of their customers. An increased fear of frogs falling from the sky will induce insurance companies to provide coverage varying with the rise and fall of fear, which will have fuck all to do with the actual risk.
And this is exactly the point. We can argue about the causes of climate change, we can have productive discussions about what, if anything, we should do about it, but denialism is stupid. Those entities whose bottom line is dependent on the climate have recognized climate change and are trying to mitigate its effects. So go ahead and try to draw distinctions between human caused and human influanced; moving the discussion to this would be a victory for my children IMHO. I just would like to put the nail in this corporate funded, anti- science denialism that is running rampant right now.
The person spruiking works for and Insurance Association. He represents the whole industry, not a single company. His job is to increase the demand for insurance overall, not for a single company. He doesn’t care which company gets the money, so long as someone does.
The second flaw is that insurance rates reflect the perceived risk, not the actual risk. Almost nobody actually gets a quite, then rings around and asks other to beat it, then goes back to the first quoter and so forth. Lots of people buy cars that way. Insurance, not so much. Most people just get two or three quotes and that’s it. In fact a lot of insurance doesn’t even involve that. My organisation has a standing agreement with an insurance company, and we get a discount on all policies and we get all our policies through them. If I am establishing a research site on a hill top, I don’t shop around. The contract is renewed for the whole organisation annually, and I have no say in that. All that means that the price will never go infinitely low in most cases.
The third flaw is that insurance is almost always comprehensive. Even if the risk of flood is nil. I can still tack on a $30 a year premium for flood, and you won’t even notice it provided that I can convince that the flood risk exists in the first place. If you don;t believe a risk exists, i can;t make that $30. But if I can convince you, I get $30 for nothing. Multiply that by a million policies and it becomes significant.
The fourth flaw is that little insurance is a cold call. Most people ring up looking for a quote for flood insurance. And they will only do that if they believe that flood risk exists. The Association doesn’t care which of their members they call from, so long as they call.
…and then convincing the customer that the risk is *higher *than that. That’s the important part. The insurance industry makes money because the actual annual risk of your house being flooded is only equal to $30, but the premium is $35. If they can convince you that the risk is 100% in a given year, they can sell you policy with a $5, 000 a year premium.
This is the basis for the old door-to-door life insurance sales. Convince the customer the risks are high, no matter how low you know them to be.
We’re not talking grossly immoral here. We are talking about playing up risks, nothing more. The old door-to-door life insurance did the same thing. “Have you considered what would happen to your wife if you died in a car crash”. Even though the actual risk of that happening were less than one in a billion, just asking that question isn’t immoral. But it is manipulative and deigned to generate sales. Similarly, claiming that hurricanes are becoming more common and more severe isn’t immoral (beyond being untrue), but if you can make people a little more afraid of hurricanes you can sell a little more hurricane insurance.
And even I have noticed that before, but I and many experts point out that this is coming from a leading question, climate change does not cause the natural disasters, the warming makes the disaster worse and more likely to occur, a better way to approach this is to notice that the odds of the disasters increase in a warming world.
I agree with all you say; I’m only suggesting that, in a free market, if someone charges much more than the actual risk requires, someone else could come along and undercut the rates. Competition will (ideally!) force the most egregious gougers out of business.
That is certainly true, but that doesn’t mean that the industry doesn’t stand to make a profit if it can increase the perception of risk. All it means is that profits won’t be as large as they would be if there were less competition.
Competition in the real marketplace doesn’t produce the absolute lowest price for consumers. It produces the lowest price that can be sustained by the manufacturers in an atmosphere of tacit collusion, near perfect knowledge of each others prices, psychological guesswork and so forth. Even without actual collusion, competitors won’t cut each other’s throats with a sustained price war because that is a game that everyone loses. Rather they will settle on a price that they can all thrive on. In the case of insurance, that price will be dictated in large part by the perception of risk.