The shift away from the traditional attitude of insurers is generating considerable controversy.
While the insurance industry has traditionally been a strong supporter of the principles and behaviors of free enterprise – as it is quite the business giant – as some major carriers start to evolve their positions as a result of climate change, this has generated some disagreements to build among many of their backers in congress.
Skepticism regarding the science behind the global warming claims remains among many in Congress.
When it comes to the insurance industry, the method chosen for dealing with this environmental trend doesn’t exclusively involve politics, but actually has a great deal more to do with the possible economic losses that could be suffered. Even if only some of the forecasts for global warming from the Intergovernmental Panel On Climate Change prove to be true, then there weather events will only become more extreme and will lead to more severe disasters as time goes on.
That panel gives a 95 percent certainty rate to the connection between climate change and human activity.
This could mean that if humans continue in the same direction, the insurance industry will only see a larger number of damages, more frequently, and with higher payouts. Torsen Jeworrek, a board member for Munich Re stated that “The heavy losses caused by weather-related natural catastrophes in the USA showed that greater loss-prevention efforts are needed.
Jeworrek said in 2011, there were $400 billion in weather related damages in the U.S., among which $119 billion were insured. That was a record breaking total. The next year, even without taking Superstorm Sandy into account, the losses experienced by the insurance industry were notably higher than the ten year average of $165 billion from which $50 billion was insured. Last year, $45 billion was paid out in claims by insurers, said Swiss Reinsurance. The U.S. portion of that was $19 billion.
Climate change will also be affecting much more than the insurance industry. The Ratings Services at Standard & Poor’s has now released a report that indicated that global warming would be affecting sovereign country credit ratings, as well