# Why Would Insurers Tell Untruths About Global Warming? **URL:** \ **Category:** Great Debates\ **Created:** [March 6, 2012, 1:45pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928 "2012-03-06T13:45:24Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 7, 2012, 7:22am UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/21 "2012-03-07T07:22:29Z")
> [@Martin\_Hyde](#): > > 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. That would be true if the risks were stable over time, which has usually been the case with weather related claims. However if there was reason to believe that claims would be increasing over time, and the companies didn’t set their rates accordingly, they would be left with inadequate reserves to deal with unexpectedly large claims. I don’t think it would be sound business to be purely reactive to a changing environment. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 7, 2012, 7:34am UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/22 "2012-03-07T07:34:42Z")
> [@Blake](#): > > …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. People are very bad judges of risk, and if the insurance companies based their premiums only on what people thought the risks were, they might go out of business. In fact people’s perception of risk depends on availability, which is how available the idea is to them, and thus their perception of risk is proportional to news coverage, not actual risk. That’s why people think murder happens more often than suicide. Driving the hearse up to the back door increases the availability of the image of death, which sells more policies - but it does not change the price of a policy. Or do you have a cite for that? I live in the Bay Area, and we have a real earthquake threat, The insurance companies don’t have to lie about that, and we get small quakes often enough that the idea is pretty available. And earthquake insurance is fairly expensive. But not because people will buy it - very few people do. It is because that is the premium the risk commands. ---
**Author:** ![brazil84](https://avatars.discourse-cdn.com/v4/letter/b/8491ac/32.png) [@brazil84](https://boards.straightdope.com/u/brazil84)\ **Post date:** [March 7, 2012, 9:02am UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/23 "2012-03-07T09:02:11Z")
> [@RTFirefly](#): > > 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. Ok, then I will assume for the sake of argument that the threat of serious man-caused global warming (CAGW) has been wildly exaggerated. (Which I actually believe.) > [@](#): > > The insurance industry clearly believes all three of these things are true, Is this claim based simply on the statements of prominent people in the insurance industry? Or is it based on actions? If it’s the former, I would counsel skepticism. After all, people and corporations have been known to lie about their beliefs. If it’s the latter, then what actions are you basing this on? > [@](#): > > 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? The most obvious reason is to justify rate increases. Duh. (Probably political correctness is a factor too.) Here’s a challenge for you: Show me a few insurance companies who have publicly announced that as a result of CAGW, they expect substantially fewer claims based on damage from snow, ice, and pipe-freezing and are therefore okay with a rate cut. ---
**Author:** ![Blake](https://avatars.discourse-cdn.com/v4/letter/b/a9a28c/32.png) [@Blake](https://boards.straightdope.com/u/Blake)\ **Post date:** [March 7, 2012, 9:50am UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/24 "2012-03-07T09:50:42Z")
> [@Voyager](#): > > Driving the hearse up to the back door increases the availability of the image of death, which sells more policies - but it does not change the price of a policy. Or do you have a cite for that? 😕 So driving the hearse up to the back door increases the perception of risk. And that increased perception of risk causes people to buy more policies for a dollar each. But for some reason it doesn’t allow the insurance company to sell any policies at all for $1.01. Even though demand increases, price remains totally inelastic. That doesn’t make any sense at all. Anyway, to answer your question, yes there are endless cites for this phenomenon. “The demand for insurance should depend not on the premium per se but on persons’ (perceived) mortality rate relative to the premium. The primary source of price variation would then be variation in premiums not matched by variations in (perceived) risk. Demand might also change if premiums and mortality rates experience equal proportional changes, because of lifetime income or wealth effects.” Pauly, M.V. _et al_ 2003.“Price Elasticity of Demand for Term Life Insurance and Adverse Selection” NBER Working Paper 9925 There’s nothing special about this phenomenon. It’s basic supply and demand. If a person believes they are at a higher risk of needing insurance, they will naturally be prepared to pay more to purchase insurance. If a person is prepared to pay more to purchase insurance, the seller can charge more for insurance. And vice versa of course. If a person thinks they have a low risk of needing for insurance, they will be priced out of the market very early. Insurance is no different to any other goods in this regard. If advertisers can increase demand for their product, they can then naturally charge more for the product. ---
**Author:** ![The\_Other\_Waldo\_Pepper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/the_other_waldo_pepper/32/12370_2.png) [@The\_Other\_Waldo\_Pepper](https://boards.straightdope.com/u/The_Other_Waldo_Pepper)\ **Post date:** [March 7, 2012, 2:04pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/25 "2012-03-07T14:04:06Z")
> [@brazil84](#): > > Here’s a challenge for you: Show me a few insurance companies who have publicly announced that as a result of CAGW, they expect substantially fewer claims based on damage from snow, ice, and pipe-freezing and are therefore okay with a rate cut. Why would they expect that? As I understand it, CAGW is entirely consistent with increased damage from snow, ice, pipe-freezing, and the rest. As was cited, blizzards are already lumped in with the _“other heavy weather that hit the country in 2011.”_ (Note also that 2011 – as in _“the extraordinary losses last year”_ – was actually colder than 2010; we could be in for year after year after year of even cooler temperatures, with any number of pipes freezing amidst record-breaking cold, and the CAGW crowd would claim their predictions had come true, and they’d be _ **right:** _ colder winters are entirely consistent with their predictions, as are colder summers, as is increased snowfall, as is decreased snowfall.) ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [March 7, 2012, 2:13pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/26 "2012-03-07T14:13:35Z")
> [@Trinopus](#): > > 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. But if one (or only a few) company (/ies) accurately gauges the risk, and all the others don’t, then this competition will just drive accurate estimation out of business. Then, since insurance is too big to fail—they’ve got to replace these people’s _homes_! You aren’t against _homes_ are you?—we’ll just bail out the shoddy businesses. ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [March 7, 2012, 3:03pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/27 "2012-03-07T15:03:18Z")
> [@The\_Other\_Waldo\_Pepper](#): > > Why would they expect that? As I understand it, CAGW is entirely consistent with increased damage from snow, ice, pipe-freezing, and the rest. As was cited, blizzards are already lumped in with the _“other heavy weather that hit the country in 2011.”_ > > (Note also that 2011 – as in _“the extraordinary losses last year”_ – was actually colder than 2010; we could be in for year after year after year of even cooler temperatures, with any number of pipes freezing amidst record-breaking cold, and the CAGW crowd would claim their predictions had come true, and they’d be _ **right:** _ colder winters are entirely consistent with their predictions, as are colder summers, as is increased snowfall, as is decreased snowfall.) So much for learning.. As the data shows 2011 was a la nina year, only by looking at the few recent years is that one can say that there was cooling, as shown before, concentrating just on the recent years is a very well known tactic of very dishonest researchers and misguided deniers. [http://www.washingtonpost.com/blogs/capital-weather-gang/post/extreme-weather-2011-warmest-la-nina-year-on-record-around-10th-warmest-overall/2012/01/19/gIQAdzOhBQ\_blog.html](http://www.washingtonpost.com/blogs/capital-weather-gang/post/extreme-weather-2011-warmest-la-nina-year-on-record-around-10th-warmest-overall/2012/01/19/gIQAdzOhBQ_blog.html) The fact remains, the overall temperature of the la nina 2011 year remained higher than the warmest years from the previous decades, the only exception being the year the el nino year of 1998 but if one just ignores the concept of an [outlier](http://en.wikipedia.org/wiki/Outlier) then denialists are happy. What can not be ignored is that for all that talk of a cooling trend the reality is that 2011 was the warmest la nina on record. As for the matter at hand, I forgot to link to the recent bit of news that show how premiums are rising in big part because of this. > **[Rising home insurance rates point to climate change](https://www.latimes.com/science/la-xpm-2012-jan-17-la-me-gs-insurance-rates-driven-up-by-global-warming-npr-reports-20120116-story.html)** > > Rising home insurance rates point to climate change > [@](#): > > The insurance execs interviewed allude to this by noting that in the past certain areas of the U.S. were targeted for higher rates because of earthquakes or frequent hurricanes or flooding. Now? There are so many disasters year upon year that the whole country is being reassessed for risk. ---
**Author:** ![The\_Other\_Waldo\_Pepper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/the_other_waldo_pepper/32/12370_2.png) [@The\_Other\_Waldo\_Pepper](https://boards.straightdope.com/u/The_Other_Waldo_Pepper)\ **Post date:** [March 7, 2012, 3:18pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/28 "2012-03-07T15:18:13Z")
> [@GIGObuster](#): > > As the data shows 2011 was a la nina year, only by looking at the few recent years is that one can say that there was cooling, as shown before, concentrating just on the recent years is a very well known tactic of very dishonest researchers and misguided deniers. I’m merely guiding off that line the OP quoted, about how the _“insurers in the United States experienced an extraordinary estimated $44 billion in losses last year”_. Insofar as the article in question is concentrating on “last year” it makes sense to do likewise. I don’t know why that article led off with a brisk _“Coming off a year of record-setting $1 billion-plus natural disasters,”_ when setting up the line about “last year.” If you feel it’s a well-known tactic of the dishonest and the misguided to so concentrate, I suggest you take it up with whoever wrote the piece; I merely respond in kind. > [@](#): > > What can not be ignored is that for all that talk of a cooling trend the reality is that 2011 was the warmest la nina on record. What can not be ignored is that for all that talk of a cooling trend the reality is that 2011 was the warmest la nina on record. Who said anything about ignoring it? I merely note that your predictions would have proven exactly as true had 2011 been the coolest la nina on record, just as they’ll remain true whether we’re in for cooler years or warmer ones; you’re free to congratulate yourself on accuracy in either case. That’s why I took issue with **brazil84** ’s point: increased damages from snow and ice are, of course, also entirely consistent with your predictions. ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [March 7, 2012, 3:22pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/29 "2012-03-07T15:22:53Z")
Nah, your tactic now is to tell others that scientists are doing a “heads we win, tails deniers lose” maneuver, even that is not accurate at all and your sources once again come loud and clear when you use boiler denier plate say so’s like “CAGW crowd”. Just keeping you honest there. ---
**Author:** ![The\_Other\_Waldo\_Pepper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/the_other_waldo_pepper/32/12370_2.png) [@The\_Other\_Waldo\_Pepper](https://boards.straightdope.com/u/The_Other_Waldo_Pepper)\ **Post date:** [March 7, 2012, 3:26pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/30 "2012-03-07T15:26:49Z")
> [@GIGObuster](#): > > Nah, your tactic now is to tell others that scientists are doing a “heads we win, tails deniers lose” maneuver, even that is not accurate at all Your accustion is inaccurate, as I’d be the first to step up and defend you against such a “heads we win, tails deniers lose” accusation; you’ve predicted at least a tenth of a degree per decade rise in temperature, which is an entirely falsifiable claim; heads you’ll win in 2017, but tails you’ll lose. ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [March 7, 2012, 3:38pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/31 "2012-03-07T15:38:29Z")
Meh, that still keeps the idea that colder global years would be expected (Tails you lose) you still said that “we could be in for year after year after year of even cooler temperatures, with any number of pipes freezing amidst record-breaking cold, and the CAGW crowd would claim their predictions had come true”. Nope, in reality harsher winters are predicted (due to more water vapor in the atmosphere), once again global temperatures are likely to increase 3 degrees with a doubling of CO2 and one can still expect cold and harsher winters, but not cooler than the averages of before. ---
**Author:** ![The\_Other\_Waldo\_Pepper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/the_other_waldo_pepper/32/12370_2.png) [@The\_Other\_Waldo\_Pepper](https://boards.straightdope.com/u/The_Other_Waldo_Pepper)\ **Post date:** [March 7, 2012, 3:51pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/32 "2012-03-07T15:51:17Z")
> [@GIGObuster](#): > > Meh, that still keeps the idea that colder global years would be expected (Tails you lose) They are; if we get “colder global years”, you’re entirely free to claim your prediction has proven 100% accurate. Unless you’re now changing your prediction? > [@](#): > > you still said that “we could be in for year after year after year of even cooler temperatures, with any number of pipes freezing amidst record-breaking cold, and the CAGW crowd would claim their predictions had come true”. Also true. At least, it was when I wrote it; in this latest post, you’re apparently now introducing a completely new claim: _“one can still expect cold and harsher winters, but not cooler than the averages of before.”_ By all means, specify: what, exactly, would prove your latest claim false? One winter of X temperature? Two in a row? Three of 'em? Name your terms and I’ll likewise proclaim _ **this** _ new prediction from the rooftops if someone ever accuses you of a Heads I Win Tails You Lose approach. ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [March 7, 2012, 4:04pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/33 "2012-03-07T16:04:01Z")
> [@The\_Other\_Waldo\_Pepper](#): > > They are; if we get “colder global years”, you’re entirely free to claim your prediction has proven 100% accurate. Unless you’re now changing your prediction? And that is the “tails, deniers lose” argument that you are assigning to climate researchers, indeed you did say it. > [@The\_Other\_Waldo\_Pepper](#): > > Also true. At least, it was when I wrote it; in this latest post, you’re apparently now introducing a completely new claim: _“one can still expect cold and harsher winters, but not cooler than the averages of before.”_ By all means, specify: what, exactly, would prove your latest claim false? One winter of X temperature? Two in a row? Three of 'em? Name your terms and I’ll likewise proclaim _ **this** _ new prediction from the rooftops if someone ever accuses you of a Heads I Win Tails You Lose approach. Meh, not the subject of the thread, it is enough to point out that this point has already been shown not to be based on the facts, nor the point was made by experts and researchers, The cold year you pointed out is not cooler than the other la nina years. ---
**Author:** ![The\_Other\_Waldo\_Pepper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/the_other_waldo_pepper/32/12370_2.png) [@The\_Other\_Waldo\_Pepper](https://boards.straightdope.com/u/The_Other_Waldo_Pepper)\ **Post date:** [March 7, 2012, 4:25pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/34 "2012-03-07T16:25:59Z")
> [@GIGObuster](#): > > And that is the “tails, deniers lose” argument that you are assigning to climate researchers, indeed you did say it. Indeed, while some things are relevant to falsifying their predictions, others aren’t. Good heavens, man, if I predict an American will win the gold medal in boxing at the next Olympics, surely it’d be mere _ **accuracy** _ for you to point out that my prediction remains 100% correct regardless of who wins the decathlon? (I likewise can’t imagine calling that a _heads-I-win-tails-you-lose_ accusation, so long as you of course grant that I’m making an entirely _heads-I-win-tails-I-lose_ prediction about boxing.) > [@](#): > > Meh, not the subject of the thread You’re the one who first brought up this all-new all-different prediction; since you now refuse to offer specifics – claiming it’s not the subject of the thread – I can’t help but wish you hadn’t mentioned it to begin with, since, y’know, it’s apparently not the subject of the thread; start a new thread if you like, or PM me. ---
**Author:** ![Tom\_Tildrum](https://avatars.discourse-cdn.com/v4/letter/t/e95f7d/32.png) [@Tom\_Tildrum](https://boards.straightdope.com/u/Tom_Tildrum)\ **Post date:** [March 7, 2012, 4:30pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/35 "2012-03-07T16:30:28Z")
Just to clarify one point, there is essentially no private flood insurance in the US, and homeowner’s policies almost universally exempt flood damage from coverage. Flood insurance is only available through a federal program called the National Flood Insurance Program; it is administered by private insurers under contracts with FEMA, while FEMA generates all pricing and covers all claims. The NFIP prices flood insurance below actuarial standards (which is why private industry doesn’t offer it), because too much desirable coastal property would otherwise be unaffordable. ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [March 7, 2012, 4:36pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/36 "2012-03-07T16:36:52Z")
Of course TOWP had to avoid the la nina point, not surprised. Anyhow, getting back to subject: > **[Why the insurance industry gets climate change | Jules Boykoff](https://www.theguardian.com/commentisfree/cifamerica/2011/jun/28/climate-change-climate-change-scepticism)** > > Jules Boykoff: Insurance companies understand risk – which is why, unlike our myopic political class, they do not have their heads in the sand > [@](#): > > Over the last five years, the insurance industry has become increasingly proactive on climate change, in terms of both underwriting and investment. Reinsurance companies – essentially firms that insure the insurers to manage and defray risk – have taken the lead. In September 2007, insurance firms formed ClimateWise in order to reduce economic risk associated with climate change. > > That same year, Andrew Castaldi, head of the catastrophe risk unit for the Swiss Re America Corp, testified to the Senate’s homeland security and governmental affairs committee, “We believe unequivocally that climate change presents an increasing risk to the world economy and social welfare.” > > In 2008, Ernst & Young – not known for having to peel bark from their sweater vests after intensive treehugging sessions – named climate change the number one risk to the insurance industry. In a 2009 report, Lloyd’s of London warned of climate change contributing to “resource-driven conflicts; economic damage and risk to coastal cities and infrastructure; loss of territory and resultant border disputes; environmentally induced migration; government fragility; political radicalisation; tensions over energy supplies and pressures on international governance”. > > And this month, while US media fail to consistently connect the dots between weather patterns and climate change, Munich Re – the world’s biggest reinsurer – stated plainly, “weather extremes such as the massive floods experienced by China since early June are due to the advance of climate change.” While acknowledging factors like population growth and rising property values – especially in risk-prone areas – Munich Re wrote, “it would seem that the growing number of weather-related catastrophes can only be explained by climate change.” > > Unlike the “poisonous polluters and rightwing ideologues” Al Gore recently skewered in Rolling Stone, the insurance industry is perfectly willing to rely on the scientific consensus as put forth by the Intergovernmental Panel on Climate Change. Citing the IPCC, Munich Re noted, “The view that weather extremes are more frequent and intense due to global warming is in keeping with current scientific findings.” Meanwhile, on the investment side, Munich Re is jacking up its investments in renewable energy assets and operations, while assigning SunPower Corp to develop a massive, 2.5 megawatt solar power system for its offices in New Jersey. > > Let’s be clear: insurance firms aren’t altruists; they’re capitalists. A rise in extreme weather means a fall in their profits. This is hardball economics based on risk analysis, not save-the-polar-bears stuff. ---
**Author:** ![The\_Other\_Waldo\_Pepper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/the_other_waldo_pepper/32/12370_2.png) [@The\_Other\_Waldo\_Pepper](https://boards.straightdope.com/u/The_Other_Waldo_Pepper)\ **Post date:** [March 7, 2012, 4:55pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/37 "2012-03-07T16:55:32Z")
> [@GIGObuster](#): > > Of course TOWP had to avoid the la nina point, not surprised. And you’re of course ignoring the points my latest reply. But in a show of good faith – or to highlight the difference between us, it’s your choice – I’ll now address the point you mentioned; I’d ignored it because it struck me as irrelevant, but I’ll now explain why I thought it was irrelevant. As per the OP, the “extraordinary” losses and “record-setting” disasters in 2011 supposedly reflect global warming; I therefore wasn’t concerned with _ **why** _ 2011 was colder than 2010, but merely wished to note _ **that** _ 2011 was colder than 2010. I likewise wasn’t concerned with _ **why** _ coming years may, in turn, be colder than 2011; I merely noted _ **that** _ they may well be – in light of brazil84’s point about whether insurers are predicting a decrease in damage from ice and snow. ---
**Author:** ![brazil84](https://avatars.discourse-cdn.com/v4/letter/b/8491ac/32.png) [@brazil84](https://boards.straightdope.com/u/brazil84)\ **Post date:** [March 7, 2012, 4:55pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/38 "2012-03-07T16:55:36Z")
> [@The\_Other\_Waldo\_Pepper](#): > > : increased damages from snow and ice are, of course, also entirely consistent with your predictions. That’s probably so, but perhaps a better question to ask is where the odds lie. Because that’s what underwriters care about. So, assuming for the sake of argument that the CAGW hypothesis is correct, how should insurers adjust their rates to take into account the change in probability of damage from snow, ice, pipes freezing, etc.? Lower? Higher? Same? ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [March 7, 2012, 5:13pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/39 "2012-03-07T17:13:39Z")
> [@The\_Other\_Waldo\_Pepper](#): > > And you’re of course ignoring the points my latest reply. > > But in a show of good faith – or to highlight the difference between us, it’s your choice – I’ll now address the point you mentioned; I’d ignored it because it struck me as irrelevant, but I’ll now explain why I thought it was irrelevant. As per the OP, the “extraordinary” losses and “record-setting” disasters in 2011 supposedly reflect global warming; I therefore wasn’t concerned with _ **why** _ 2011 was colder than 2010, but merely wished to note _ **that** _ 2011 was colder than 2010. > > I likewise wasn’t concerned with _ **why** _ coming years may, in turn, be colder than 2011; I merely noted _ **that** _ they may well be – in light of brazil84’s point about whether insurers are predicting a decrease in damage from ice and snow. Just saying, it is not showing the whole picture that allows misleading statements to remain in a discussion. One has to look at the big picture to see that not mentioning the fact that colder la nina years have actually increased in temperature is an important fact to consider. And sticking to the subject, la nina years generally causes more weather damage to the USA than its flip side, the better known El Niño. World wide there is an increase on the number of events. > **[A Sunburnt Country](https://skepticalscience.com/news.php?n=1296)** > > I Love a Sunburnt Country > Sometimes we get important insights from the most unexpected of places. Poets & Insurance Companies. Not what we might always connect together. But you never know what they might be able to offer... > [@](#): > > And what Munich Re report is that Geophysical events, although they fluctuate from year to year, haven’t meaningfully changed on frequency in 31 years. However, the other three categories have increased in frequency over that time. After removing the Geophysical events, the Weather/Climate related events have roughly tripled in 31 years. > > It is important to remember here that Munich Re are reporting numbers of events per year that they classify as catastrophic. Another graph on page 5 of the report shows dollar value. > > A Re-Insurer has no reason to distort their analysis. If they under-report they are in breach of their responsibilities to their share-holders. So to if they over-report. They are about the most honest source one could find for information on this because they have no motive to distort anything - the bottom-line doesn’t lie. > > It appears from a very simple data source that weather is becoming more extreme. More Storms, more Droughts and Flooding Rains. Just as expected. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 7, 2012, 5:20pm UTC](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928/40 "2012-03-07T17:20:19Z")
> [@Blake](#): > > 😕 > > So driving the hearse up to the back door increases the perception of risk. And that increased perception of risk causes people to buy more policies for a dollar each. But for some reason it doesn’t allow the insurance company to sell any policies at all for $1.01. Even though demand increases, price remains totally inelastic. > > That doesn’t make any sense at all. > > Anyway, to answer your question, yes there are endless cites for this phenomenon. > > “The demand for insurance should depend not on the premium per se but on persons’ (perceived) mortality rate relative to the premium. The primary source of price variation would then be variation in premiums not matched by variations in (perceived) risk. Demand might also change if premiums and mortality rates experience equal proportional changes, because of lifetime income or wealth effects.” > Pauly, M.V. _et al_ 2003.“Price Elasticity of Demand for Term Life Insurance and Adverse Selection” NBER Working Paper 9925 > > There’s nothing special about this phenomenon. It’s basic supply and demand. If a person believes they are at a higher risk of needing insurance, they will naturally be prepared to pay more to purchase insurance. If a person is prepared to pay more to purchase insurance, the seller can charge more for insurance. And vice versa of course. If a person thinks they have a low risk of needing for insurance, they will be priced out of the market very early. > > Insurance is no different to any other goods in this regard. If advertisers can increase demand for their product, they can then naturally charge more for the product. There is a big difference between demand varying with price and availability - which I certainly don’t doubt - and the amount charged varying with demand. Underwriting is all about making a fairly steady return based on premiums exceeding payments. There are segments which do this - like car rental insurance - but do you have any cites where life insurance or home insurance premiums change? [Previous page](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928.md?page=1) [Next page](https://boards.straightdope.com/t/why-would-insurers-tell-untruths-about-global-warming/614928.md?page=3)