Climate change deniers may pooh-pooh the science that says it’s all too real and threatening. But they’ll hardly be able to argue with their insurance rates increasing, reflecting the rising risk of continued human consumption of fossil fuels.
As we jet toward Earth Day on April 22, the American Academy of Actuaries has released a report on climate change titled “Essential Elements” on the frequency and severity of weather related events. The report notes increases in droughts in the western United States, higher rainfall and snowfall in the East, and greater damage from tornadoes, hurricanes and other extreme climate events.
Because of climate change, “insurers are facing higher property and casualty insurance losses, which ultimately leads to higher costs to consumers and businesses,” the report notes. “Climate change and a rise in extreme weather-related events could increase losses in the future.”
Global mean surface temperatures have gone up by 0.6 degrees Celsius since 1951. The American Academy of Actuaries report put the total number of global natural loss events in 2014 at 980 with overall losses estimated at $110 billion. They claimed 7,700 lives. In 2014, from May 18-23, severe storms did $2.9 billion damage; severe winter damage, $1.7 billion from Jan. 5-8; and severe warmer weather damage from June 3-5, $1.3 billion.
Seven of the 10 warmest years on record in the contiguous 48 states have occurred since 1990, and the fraction of global land experiencing blistering summer temperatures has risen 10-fold in the last 50 years.
North America is particularly threatened by climate change: “Over the past three decades, the number of weather-related loss events in North America grew by a factor of five, according to a 2012 report by Munich Re. This compares with a four-fold increase in Asia, 2.5 in Africa, two in Europe, and 1.5 in South America. North America faces every type of hazardous weather risk — hurricanes, tornadoes, drought, flood, wildfire and storms, according to the report. One
reason is that no east-west mountain range exists in North America to prevent southern warm air from colliding with cold Canadian weather fronts.”
The National Oceanic and Atmospheric Administration reports that number of weather-related events with losses exceeding $1 billion nearly doubled, rising from 80 between 2004 and 2013 compared with only 46 events in the previous decade.
People in the western U.S. lived through hotter and drier temperatures in the last decade. We are seeing the effects now with severe water shortages and use restrictions in California.
“There were 14 drought and wildfire events where each loss exceeded $1 billion in 2004-2013, according to NOAA data, compared with 10 similar events between 1994 and 2003,” the American Academy of Actuaries report said. “NOAA reported three winter storm and freeze events where losses exceeded $1 billion between 2004 and 2013, compared with seven similar events in 1994-2003.”
But don’t tell that to the people in Boston and other parts of New England, which got hammered with several feet of record-setting snow last winter.
“Water damage has surged over the past 10 years, in large part caused by increased hurricane activity,” the report said. “NOAA reported 23 flood and hurricane events with losses exceeding $1 billion between 2004 and 2013, compared with 16 from 1994-2003.”
Severe storm in the last decade resulted in the biggest increase from weather-related events. There were 40 tornadoes, hail storms, severe thunderstorms, derechos and flash floods from 2004 to 2013 with losses exceeding $1 billion compared with only 13 between 1994 and 2003.
The American Academy of Actuaries is part of a North American actuarial group jointly developing the Actuaries Climate Index, which will measure the frequency and intensity of extremes in temperature, precipitation, drought, wind, sea level and soil moisture in the U.S. and Canada. The group plans to report later who and what are at risk because of climate change and quantify that risk.
From that people in the most affected areas can expect what they pay in insurance to go up.