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Insurance costs: Another side to climate change

Our insurance premiums are certain to rise if this piece on how the insurance industry is under threat in its ability to deal with claims arising from climate change. Whatever is happening in the USA can be replicated around the globe.

"As a surge in catastrophic weather events leads to billions of dollars in claims, climate change may pose the insurance industry’s biggest problem — and profit potential.

An unusual onslaught of floods in Mississippi, tornadoes in the Midwest, drought and wildfires in Texas and earthquakes abroad has wiped out hope of much profit for many insurance and reinsurance companies this year.

Natural disasters, including Japan’s earthquake and tsunami, have left the industry on the hook for $60 billion in the first six months of this year alone, according to data from reinsurance giant Munich Re.

That’s nearly five times the first-half average since 2001, and the oftentimes costly hurricane season is just getting underway.

Although the damage has been worse than expected, the industry has plenty of capital set aside to weather the losses — barring the occurrence of more off-the-charts disasters, which insurers and reinsurers say may or may not be linked to global warming."

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