A new GAO Report tells us that unlike private insurers government insurers are not planning for the risks of climate change.
Major private and federal insurers are both exposed to the effects of climate change over coming decades, but are responding differently. Many large private insurers are incorporating climate change into their annual risk management practices, and some are addressing it strategically by assessing its potential long-term industry-wide impacts. The two major federal insurance programs, however, have done little to develop comparable information.
This would seem to put some of my free market friends who continue to believe that global warming is a leftist hoax in something of a bind. Is climate change real or are government regulators wise and farsighted?
Private parties have to take it serious because of the risk of being sued by fanatics. Or being regulated by agencies.
Alternatively, the senior management in the current administration is in the global-warming-is-a-hoax camp. Bad decisions in government are often systematic, but they can also be simply wrong-headed.
Skeptics are not denying global warming, they are denying that it is primarly human-caused.
I would say this puts my statist friends in a bind because now the free market is responding faster to this “crisis” than the government.
Still, I think everyone is simply more aware of how the climate can change. I would like to point out the the Medieval warm period and the Little Ice Age as good examples. Whether or not it’s out of our control is still the question.
Somehow I think the sun has much more of an effect on the environment than 6 billion human beings, but some call me crazy.
A stopped clock is right twice a day, and all that.
No, the serious people aren’t claiming that GW isn’t man-caused. The
IPCC report is pretty explicit. What is left to doubt is the scale
and quickness of the damage. Will the effect be diabatic enough that
inefficiencies can be avoided?
Y2K was totally different because there was an obvious problem. You could set your bank’s system to Jan 1, 2000 and see that everything got messed up. The effects of climate change is based on inaccurate models.
“Many large private insurers are incorporating climate change into their annual risk management practices”
I need some specifics, from what I’ve read in risk managemnt, risk has been reassesed due to wealthier people living in riskier areas (and previously modeling these riskier areas based on the old low risk demographics). Any potential increase in risk due to GW isn’t significant.
Matt, A friend who works in reinsurance said that the industry saw Karina as a major boon. It was great excuse to raise rates.
So the mass of prestigious scientists are ready to bet their reputations on predicting what the weather’s going to be like one hundred years from now when their models can’t even pattern what happened in the last hundred years? The right question is: why would anyone think, given the history of predictions, that anyone could correctly predict the weather over a hundred-year time span?
Everybody has a model. People above have models, even as they decry models. When someone says “Somehow I think the sun has much more of an effect on the environment than 6 billion human beings, but some call me crazy.” That is a model. It isn’t a very sophisticated model, but it is a model nonetheless.
Now the thing is, as you refine and test your model, bring increasing levels of sophistication and knowledge to it, it becomes at some point science.
That doesn’t mean it is “right.” It just means that it is following the age old human quest for more perfect knowledge.
Now, what’s the alternative? As I can see it there is only one. That is to say that we don’t want a better answer (though a better model), and to say that we will take whatever climate we get.
Sad choice, isn’t it? Either whatever, or we try to understand, predict, and prepare.
“Well then what is the choice of a scientist who wants to study the possibility that global warming is not anthropogenic?”
I disagree that there is some hidden agenda which is driving the scientific conclusions. There’s not. People are following the evidence. The evidence is now overwhelming that the climate is warming and that increases in greenhouse gases caused by fossil fuel burning is the main factor. The evidence wasn’t overwhelming 20 years ago, or even 10, but it is now.
If you have some firm evidence that there is a conspiracy at the NSF and other funding agencies not to do science but instead to engage in climate propaganda, I’m eager to hear it. Until then, your claims sound as plausible as most conspiracy theories do.
That was supposed to read “intelligent design.:
@Matt:
As soon as there is evidence that hurricane risk will decrease insurance companies will need to put it into their models. Otherwise they will be priced out of the market.
The thing is that (with global warming going on) in the meantime the insecurity about whether hurricane risk will increase, decrease or stay the same will lead to rising rates, since the insurance company cannot accept additional risk (even if it is only the risk of risk) without being paid for it. Same effect as option prices rise when volatility increases.
I would never claim that mankind for sure will be worse off with a warmer world. As many here pointed out the forecasting of the actual weather is much too difficult. However, it is clear to me that the risk of being worse off increases with the speed and extent of temperature change. And I have a gut feeling that the risk/reward distribution regarding a rapidly warming world is tilted towards the risk-side (since we have seen a lot of times in history that rapid changes to an ecosystem lead to negative effects for men – at least in the mid-term).
“The evidence is now overwhelming that the climate is warming and that increases in greenhouse gases caused by fossil fuel burning is the main factor.”
While the first argument is true, the second, that CO2 is the cause, is, scientifically, decidedly not proven. We know the Earth is warming. We know that CO2 is increasing. We DO NOT have proof of causality, only a theory, and that comes originally from a model that doesn’t take into account any changes in solar activity.
Should we focus all our energies on changes in the climate that will happen relatively slowly (by human measures) and have always happened in our existence, and for which we are equipped to adapt?
Shouldn’t more focus be made on identifying planet killing asteroids and developing a method to avoid them? Or is this a case like the perceived safety of driving versus flying, where we know one is more dangerous, but fear the other more?
“‘Now, what’s the alternative? As I can see it there is only one. That is to say that we don’t want a better answer (though a better model), and to say that we will take whatever climate we get.’
Clearly a failure of imagination. Why not create better models? I don’t mean models that are designed to specifically disprove anthropogenisis. But surely a model that can not just show that CO2 is the cause but by how much, is useful. Wouldn’t you want to know how much we have to curtail emissions? Wouldn’t you want to know where to target your efforts for the greatest result?”
Are you agreeing with me then, but phrasing it as disagreement?
“The Risk of Risk,” are you fucking cereal?
You are a marketer’s dream.
You are correct that eventually insures will have to put that into their models, but the publications are very one sided right now, which makes it very easy to conveniently ommit such factors in the time being. Before that happens, the growth in rates and the market have to flatten so that companies are forced to directly compete and undercut eachother for business. I don’t know if the industry is highly competive right now, I am pretty certain that entry into the industry is far from easy. And, getting an account isn’t worth a 10% reduction in revenue across your entire customer base (10% is not a real number, just a random guess).
Anyway, the Risk of Risk (which is almost as likely to mean that there will be less risk), is fantastically small (not significant, maybe not even observable). Other potential risk changes (noted above) swamp that potential factor. Note from the GAO report that they estimate that if the 1993 midwest floods happened today, the damage would be 5 times greater. That trend should put risk of risk from GW into perspective.
Truly Amazed,
aaron
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