Insurance, Politics & Climate Change

Table of Contents

 

Chapter 1:  Introduction to Insurance, Politics & Climate Change

1

Is Climate Change Real?

2

Insurers See the Writing on the Wall; People Just See the Wall

2

Dude! This is About Weather!

3

A Surprisingly Difficult Topic

5

A Complicated Insurance Topic

7

Insurers Look at Financial Risks, Not Politics

9

Facts are Verified; Insurance Companies Weigh In

11

A Constant Attempt to Muddy the Information Waters

13

Insurers Pick Up the Claims, and Raise Premiums

15

Insurers Assess Global Change Risks

16

Claim Tails

17

NAIC Looks at Economic Threats to Insurer Stability

19

Chapter 2:  Spilled Milk

22

From an Insurance Perspective

24

Flood Risk and the NFIP

26

Other NFIP Issues

27

H.R. 5381

28

Climate Change: A Financial Issue for Insurers

29

Violent Conflicts

30

Climate Change or Simply Bad Luck?

30

A Difficult Concept for Some People

31

Change and the Unknown Can be Frightening

31

Lack of Understanding Affects Acquired Knowledge

31

Financial Gains Affects Climate Change Statements

32

Inability or Unwillingness to Perform Personal Analysis

32

Financial Gains Determine Opinions

33

Moving Forward

33

Identifying the Skeptics

34

How Can Insurers Meet the Climate Challenge?

36

Today’s Political Atmosphere Molds the Actions of Insurers

37

Insurers must deal with a Political Climate

41

Distributional Politics Affect Insurance

44

A Tough Situation for Insurers

44

Insurance Statistics

45

Climate Mitigation is Broader than Most People Realize

46

Canada

46

Believe the Insurers, Not the Politicians

48

Adding Billions of People Make this Climate Change Different

49

Photosynthesis: The Role Plants and Trees Play

52

Insuring Volcanic Activity

54

    Hawaii, Alaska, Pacific Coast

56

    Wyoming and the Rockies, Volcanoes in General

57

Unusual Events Can Affect Insurance Policies

57

Policy Exclusions

58

Past Climate Change Before Use of Fossil Fuels

60

Asteroids

62

Insurance & Government Actions Related to Climate Change

67

    Pew Research Center surveys

70

Chapter 3:  Climate Change Risk Management

72

Insures Recognize the Risk

72

Crop Loss Equates into Insurance Payments

74

Insurance Premiums Impact Food Pricing

77

Government Insurance Programs Pay Out Higher Losses

82

Insects, Weeds & Diseases

84

Livestock Insurance

85

Agricultural Business Insurance

85

General Liability Insurance

86

Property Insurance

87

    RCV, ACV, FRC

88

Farm Employee Insurance

89

Over-the-Road Vehicle Insurance

90

Crop/Income Insurance

91

Other Types of Insurance

92

More Heat, Drought & Precipitation to Come to Agriculture & Insurers

93

    Consequences on food security in U.S. and Canada

95

Forests

96

Bioenergy: Plant-Based Material

99

The Future of Forests

100

Chapter 4:  Our Planet’s Future

103

Water

103

Like Insurance, Ecosystems Buffer Severe Weather Events

105

Plants and Animals

105

NOAA

107

Seasonal Patterns Eventually Equate into Insurance Losses

108

Adaption in Insurance as well as Species

109

Health Insurance

110

Air Pollution Increases Health Care Claims

111

Allergens Cause Health Care Issues

112

Temperature Extremes Affect the Life & Health Insurance Industry Too

113

Weather Events Cause Related Deaths & Injuries (So More Claims)

114

Heavy Downpours Cause Health Issues

115

Food Security Affects Health, so Affects Insurance

116

Mental Health & Stress-related Disorders

116

Vulnerable Individuals Face the Highest Risk

117

Defining the Risks & How Insurers Respond

119

Defining Fossil Fuels & their Relationship to Insurers

120

Reinsurance Companies Consider Global Warming Risks

124

So What if Humans Activity is Responsible?

125

Oil

126

Coal

127

Natural Gas

127

Environmental Impairment Liability Insurance (EIL)

129

    Specialty Policies

133

    Upstream Emissions

134

Energy Alternatives

135

Looking at Solutions

135

Options Exist

136

Insurance Solutions to Global Warming

137

    Loss Predictability

138

Global Warming & Wildlife

140

“Supposing” Future Claims Experience

142

Civil Litigation Equates into Liability Claims

144

Measurable Risks Are Required

145

Micro Insurance

146

    Disertification

147

    Often referred to as community-based financing

149

Reducing Loss Risks Associated with Climate Change

150

Catastrophe Reserve Funds

150

Risk Pools

151

Insurance-Linked Securities

151

Insurers have been Aware of Climate Change

151

Insurer Incentives to Reduce Us of Fossil Fuels

151

New Pipelines

152

Many Confusing Opinions & Offered Solutions

152

    Intergovernmental Panel on Climate Change report

153

The Nicholas Stern 2006 Review

155

Insurers Understand the Effects of Automobile Emissions

157

How People Live Has Always Changed with Time

162

Winners & Losers in Climate Change Issues

165

Why We Must Believe in Insurers

166

Chapter 5:  Climate Change Affects Insurance Companies & Policyholders

170

The Lawsuits Continue to Rise in Numbers

170

Hey Dude, it is still Just Weather!

171

  Fact #1

171

  Fact #2-#8

172

  Fact #9-#12

173

Federal Policies on Climate Change Between 2017and 2020

174

An Ever-Growing Wave of Lawsuits Hels the Insurance Industry

179

  City of Los Angeles v. National Highway Traffic Safety Administration

180

Will Litigation be the Savior of the Insurance Industry?

182

  Wind Insurance in Wind Pool Areas

184

  What Defines a Windstorm

184

  Windstorm Insurance Deductibles in Florida

185

Insurer Risk Knowledge & Management

186

  FEMA manages premiums collected by NFIP

186

Assessing Risk & Avoiding Losses

191

    Political & legal roadblocks

193

Life & Health Insurance Will be Affected

197

  Changing Landscape Affects Health Issues & Health Insurance

198

Chapter 6: Insurers Have Limited Abilities

200

Persuasion Through Premium Rates

200

  Insurance penetration rates

202

  MCII

202

  LEED

205

  California continues to rank the highest in economic losses

208

Department of Commerce Estimations

209

NFIP: What is the Message for Taxpayers?

211

  Flood Insurance Program is a fee-for-service

212

National Flood Insurance Program (NFIP)

214

1. Premium Increases & Surcharges

214

  Pre-FIRM Subsidized Policies

215

  Other Subsidized Policies

216

  V Zones

216

  A Zones

216

  X Zones

216

  Miscellaneous

216

  Changes to Become Effective 1/1/19

216

2. Policy Reformation for Use of Incorrect Standard Flood Ins Policy Form

217

3. Premium Receipt Date for Guidance for Invalid Payments

217

4. Primary Residence Determination

218

5. Clarification of Increased Cost of Compliance Premium

218

6. HFIAA Section 28, Clean Communication of Risk

218

7. Datum Conversion

218

8. Updated Claims Data Elements

219

Europe Ahead of America in the Reality Category

219

    Insurers & reinsurers are important to world economy

220

Litigation Risk Due to Both Actions & Inactions Related to Climate Change

221

Physical Risks

225

Transition Risks

225

Liability Risks

226

Driving Factors

226

Insurer Risk is Increasing

226

Insurance Categories

227

Business Interruption Losses & Insurance

229

Food Safety & Insurance

229

Global Security Also Impacted

229

General Insurance & Liability Affected

230

It is All in the Math

230

Insurance Company Wake-Up Calls

231

Insurers Invest Too

231

Dealing with Transition Risks

232

Liability Risks

233

    Claims-made policies

234

    The black swan theory

235

Professional Indemnity

236

Making Assessments

237

As Always, Opinions Vary

238

Tipping Events

241

International Collaborations & Finance: Premium Rise as Claims Rise

242

Developing New Insurance Products

243

Insurance Impacts from Global Warming

243

  Life Insurance

243

  Health Insurance

244

Insurers Recognized It First (Along with Scientists of course)

248

Concepts of Insurability

250

Chapter 7: The Ethics of Climate Change

253

Climate Change: An Ethical Issue

253

The Poorest of the Poor

254

Predicting & Coping

256

New Technology & the Hope that it Will Heal

257

  Power

259

  Transport Technology

259

Funding Ethically Instead of Politically

259

What’s in a Name?

261

    Three primary issues that relate to climate change

262

  Example

267

    Philosophies consider self-interest

268

    IPPC report

269

    Ethical duties require developed countries

270

Climate Change: A Moral Issue

275

    Social discount rate (SDR)

284

Change Starts at the Top

287

Giving the Subject Legitimacy

287

Making Global Warming Personally Relevant

288

Making Ethical Choices for our World

289

Regulatory & Political Risks

290

From a Practical Standpoint

295

Choosing Ethical Conduct

295

Ethics Beyond Philosophers

296

Being Ethically Responsible is Hard Work

297

Responsibility to Others

298

A Legal Liability

300

    Morality is the shift

301

Free Choice

302

    Plato

303

Egoism

304

Objectivist Theory

305

Ethics Mean Independent Analysis

306

Ethical Conduct Varies

308

Moral Persuasion

309

Rationalizing Morals

310

                                                                                   

United Insurance Educators, Inc.

8213 – 352nd Street East

Eatonville, WA  98328

(253) 846-1155