Friday, June 2, 2006

When Will They Ever Learn: The Stormy Aftermath Affects Hurricane Insurance

Planet Ark reports that this season's hurricanes may cause US$100 billion of property losses, and wipe out 20 to 40 insurers.  Planet Ark Hurricane Insurance link  The human cost  of these hurricanes is greater than the thousands of lives lost each year.  US$100 billion is five times more than the amount that it would take to assure that every person on the planet had safe, clean drinking water, adequate sanitation, and hygiene education. 

The money comes from our pockets whether in the form of increased insurance premiums or government aid.  IMHO, global warming and the intensifying hurricanes that it may be unleashing a tremendous economic drain and on many levels a moral disaster.

Costs from last year's major catastrophes, or "megacats" -- Hurricanes Katrina, Rita and Wilma -- have already reached US$58 billion, with some claims still in court. In addition, federal aid to rebuild areas such as New Orleans, which was flooded by Katrina, will top US$100 billion...With population expansion in vulnerable areas and soaring real estate values, catastrophe losses are likely to double every 10 years, according to hurricane modelers. In Florida, which has seen five major hurricanes in the past two years, four insurers have already failed....When insurers are no longer around to answer the phone, the burden falls to the state, which sets up a claims fund and forces solvent insurers to pay the costs.   Insurers are also running from areas where storm damage is likely to be the worst. American International Group Inc., the world's largest insurer, is declining to write new property policies in areas of the Gulf Coast, while Allstate Corp., the US's second-largest home insurer, is limiting exposure in areas as far north as New York....Six of the 10 costliest storms in US history have occurred within the 14 months of the 2004-2005 hurricane season. While 2006 isn't expected to suffer the megacats of 2005, it will be part of a pattern that has seen the most devastating pattern of hurricanes since 1900.

Climate Change, Economics, Governance/Management | Permalink

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