Climate change puts insurers at risk

U.S. Insurers, government and consumers are at enormous risk of escalating losses from hurricanes and other weather-related events, according to a new report issued by the Ceres investor coalition.
"Insurance as we know it is threatened by a perfect storm of rising weather losses, rising global temperatures and more Americans than ever living in harm’s way," said Mindy S. Lubber, president of Ceres, which commissioned the study.
"Insurers and regulators have failed to adequately plan for these escalating weather events that scientists predict will intensify in the years ahead due to warming global temperatures."
Ceres directs the Investor Network on Climate Risk (INCR), a network of more than 50 institutional investors in the U.S. and Europe, which collectively manage more than $2.7 trillion worth of assets.
The Ceres report cites a 15-fold increase in insured losses from catastrophic weather events (those with over $1 billion of damages) in the past three decades losses that have far out-stripped premium increases, inflation, and population growth over the same time.
Even before Hurricane Katrina, consumers and businesses in many parts of the U.S. were seeing higher premiums, lowered limits and increased restrictions in coverage due to rising weather-related losses in Florida, Texas, California and elsewhere, the report notes.
If climate change trends and insurance trends continue, the report warns, the availability and affordability of insurance will be at even greater risk for homeowners and businesses.
State and federal governments may also become "insurers of last resort" in response to private insurers further restricting coverage and withdrawing from more markets, the report predicts.