Wednesday, October 22, 2014

A Retreat from Weather Disasters

Estimated annual losses worldwide from weather-related natural disasters in billions of 2014 dollars  (Credit: Swiss Re) Click to enlarge.
Today, from Florida to Delaware, property insurance near the water is becoming harder and harder to find.

“I’m worried because insurers only stay in markets until they deem them not profitable,” said Mike Kreidler, the Washington State insurance commissioner.  “We want these insurers to stay fully in the market.”

This is not exclusively an American phenomenon.  As the damages wrought by increasingly disruptive weather patterns have climbed around the world, the insurance industry seems to have quietly engaged in what looks a lot like a retreat.

A report released Wednesday by Ceres, the sustainability advocacy group, makes the point forcefully.  “Over the past 30 years annual losses from natural catastrophes have continued to increase while the insured portion has declined,” it concluded.

Last year, less than a third of the $116 billion in worldwide losses from weather-related disasters were covered by insurance, according to data from the reinsurer Swiss Re.  In 2005, the year Katrina struck, insurance picked up 45 percent of the bill.

This gradual, low-key withdrawal reveals an alarming weakness.  Even as the risks of climactic upheaval increase with a warming atmosphere, the industry created to provide for civilization’s first line of defense against disasters is turning tail.

“In the long run,” the Ceres report added, “these coverage retreats transfer growing risks to public institutions and local populations, and reduce the resiliency of communities, which are less able to finance post disaster recoveries.”

Read More at A Retreat from Weather Disasters

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