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 Even for Insurers

5

Time Matters

6

A Complicated Insurance Topic

6

Insurers Look at Financial Risks, Not Politics

9

Facts are Verified; Insurance Companies Weigh In

10

Insurers Possess Knowledge

11

    Outcome #1 & #2

12

A Constant Attempt to Muddy the Information Waters

13

Insurers Pick Up the Claims, and Raise Premiums

14

Insurers Assess Global Change Risks

15

Insurance Claim Tails

17

NAIC Looks at Economic Threats to Insurer Stability

18

Chapter 2:  Spilled Milk

21

From an Insurance Perspective

23

Flood Risk and the NFIP

25

Other NFIP Issues

26

H.R. 5381

28

Climate Change: A Financial Issue for Insurers

29

Violent Conflicts

29

Climate Change or Simply Bad Luck?

30

A Difficult Concept for Some People

30

Change and the Unknown Can be Frightening

30

Lack of Understanding Affects Acquired Knowledge

31

Financial Gains Affects Climate Change Statements

31

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?

35

Today’s Political Atmosphere Molds the Actions of Insurers

37

Insurers must deal with a Political Climate

41

Distributional Politics Affect Insurance

43

A Tough Situation for Insurers

43

Insurance Statistics

45

Climate Mitigation Affects Insurance Producers

45

Canada

47

Insurer Assessments of the Future

47

Believe the Insurers, Not the Politicians

49

Adding Billions of People Make this Climate Change Different

50

Photosynthesis: The Role Plants and Trees Play

53

Insuring Volcanic Activity

55

    Hawaii, Alaska

57

    Pacific Coast, Wyoming and the Rockies, Volcanoes in General

58

Unusual Events Can Affect Insurance Policies

59

Policy Exclusions

60

Past Climate Change Before Use of Fossil Fuels

61

Asteroids

64

Insurance & Government Actions Related to Climate Change

69

Chapter 3:  Climate Change Risk Management

74

Insures Recognize the Risk

74

Crop Loss Equates to Insurance Payments

76

Insurance Premiums Impact Food Pricing

79

Government Insurance Programs Pay Out Higher Losses

84

Insects, Weeds & Diseases

85

Livestock Insurance

86

Agricultural Business Insurance

87

General Liability Insurance

88

Property Insurance

89

    ACV, RCV, FRC

89

Farm Employee Insurance

91

Over-the-Road Vehicle Insurance

92

Crop/Income Insurance

93

Other Types of Insurance

93

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

94

Forests

97

Bioenergy: Plant-Based Material

101

The Future of Forests

102

Chapter 4:  Our Planet’s Future

104

Water

104

Like Insurance, Ecosystems Buffer Severe Weather Events

106

Plants and Animals

106

Seasonal Patterns Eventually Equate into Insurance Losses

109

Adaption Required in Insurance as well as Species

110

Health Insurance

112

Air Pollution Increases Health Care Claims

112

Allergens Cause Health Care Issues

113

Temperature Extremes Affect the Life & Health Insurance Industry Too

114

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

115

Even Heavy Downpours Cause Health Issues

116

Food Security Affects Health, so it also Affects Insurance

117

Mental Health & Stress-related Disorders

117

Vulnerable Individuals Present the Highest Health Insurer Risk

118

Defining the Risks & How Insurers Respond

120

Defining Fossil Fuels & their Relationship to Insurer Risk

121

Reinsurance Companies Consider Global Warming Risks

122

Insurers Do Not Care Whether Climate Change is Human Caused

123

Oil

124

Coal

125

Natural Gas

125

Environmental Impairment Liability Insurance (EIL)

127

    Earthquake Claims That Appear to be Caused by Fracking

127

Energy Alternatives

133

Insurers and Others Consider Solutions

133

Options Exist

134

Insurance Solutions to Global Warming

136

Global Warming and Wildlife & Livestock

138

Estimating Future Claims Experience

140

Civil Litigation Equates to Liability Claims

142

Measurable Risks Are Required by Insurers

143

Micro Insurance

144

Reducing Insurance Loss Risks Associated with Climate Change

148

Catastrophe Reserve Funds

149

Risk Pools

149

Insurance-Linked Securities

149

Insurers have been Aware of Climate Change for Years

149

Insurer Incentives to Reduce Use of Fossil Fuels

149

New Pipelines

150

Many Confusing Opinions & Offered Solutions

150

The Nicholas Stern 2006 Review

154

Insurers Understand the Effects of Automobile Emissions

155

How People Live Has Always Changed Over Time (Insurance Needs Change too)

160

Winners & Losers in Climate Change Issues, Including Insurance Availability

163

Why People Must Believe the Insurers

164

Chapter 5:  Climate Change Affects Insurance Companies & Policyholders

168

The Lawsuits Continue to Rise in Numbers

168

Examples of Severe Weather Events in 2021

169

It Is Still Just Weather!?

171

  Fact #1-#5

171

  Fact #6-#12

172

Federal Policies on Climate Change Between 2017and 2020

173

An Ever-Growing Wave of Lawsuits Helps the Insurance Industry

175

Will Litigation be the Savior of the Insurance Industry?

178

  Wind Insurance in Wind Pool Areas

180

  What Defines a Windstorm?

180

  Windstorm Insurance Deductibles in Florida

181

Insurer Risk-Knowledge & Management

182

Assessing Risk & Avoiding Losses

187

Life & Health Insurance Will be Affected

193

  Changing Landscape Affects Health Issues & Health Insurance

194

Chapter 6: Insurers Have Limited Abilities

196

Persuasion Through Premium Rates

196

    Insurance penetration rates

198

Department of Commerce Estimations

205

NFIP: What is the Message for Taxpayers?

207

National Flood Insurance Program (NFIP)

210

1. Premium Increases & Surcharges

210

  Pre-FIRM Subsidized Policies

211

  Other Subsidized Policies

211

  V Zones

212

  A Zones

212

  X Zones

212

  Miscellaneous

212

  Changes to Become Effective 1/1/19

212

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

213

3. Premium Receipt Date for Guidance for Invalid Payments

213

4. Primary Residence Determination

213

5. Clarification of Increased Cost of Compliance Premium

214

6. HFIAA Section 28, Clean Communication of Risk – Phase 2 Re-underwriting

214

7. Datum Conversion

214

8. Updated Claims Data Elements

215

NFIP Risk Rating 2.0

215

What is not Changing

216

Premium Rates under Risk Rating 2.0

217

Phase I and Phase II

218

General Property Form / Standard Flood Insurance Policy

220

Europe Ahead of America in the Reality Category

248

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

250

Physical Risks

254

Transition Risks

254

Liability Risks

254

Driving Factors

254

Insurer Risk is Increasing

256

Insurance Categories

257

Business Interruption Insurance and Resulting Claims

258

Food Safety & Insurance

258

Global Security Also Impacted

259

General Insurance & Liability Affected

259

It is All in the Math

260

Insurance Company Wake-Up Calls

260

Insurers Invest Too

261

Dealing with Transition Risks

261

Liability Risks

262

Professional Indemnity

265

Making Assessments

266

As Always, Opinions Vary

267

Tipping Events

271

International Collaborations & Finance: Premium Rise as Claims Rise

271

Developing New Insurance Products

272

Insurance Impacts from Global Warming

273

  Life Insurance

273

  Health Insurance

273

Insurers Recognized It First (Along with Scientists of course)

278

Concepts of Insurability

279

Chapter 7: The Ethics of Climate Change

282

Climate Change: An Ethical Issue

282

The Poorest of the Poor

283

Predicting & Coping

285

New Technology & the Hope that it Will Heal

285

  Power

287

  Transport Technology

287

Funding from an Ethical Obligation

287

What’s in a Name?

289

    Three primary issues that relate to climate change

289

    IPPC report identified the ethical considerations

295

Climate Change: A Moral Issue

301

    Aerosol Pollution

303

    In insurance Uncertainty is a technical term.

307

    Adaption where possible

309

Change Starts at the Top

312

Giving the Subject Legitimacy

312

Making Global Warming Personally Relevant

313

Making Ethical Choices for our World

313

Regulatory & Political Risks

314

From a Practical Standpoint

319

Choosing Ethical Conduct

320

Ethics Beyond Philosophers

321

Being Ethically Responsible is Hard Work

322

Responsibility to Others

323

A Legal Liability

325

Free Choice

327

Egoism

329

Objectivist Theory

330

    Example # 1 & #2

330

Ethical Conduct Varies

331

Moral Persuasion

332

Rationalizing Morals

333

                                                                                   

United Insurance Educators, Inc.

 

mail@UIEce.com

 

(253) 846-1155