Magazine article The Futurist

The Rising Costs of Global Warming: As Global Temperatures Rise, the Insurance Industry Prepares for the Worst

Magazine article The Futurist

The Rising Costs of Global Warming: As Global Temperatures Rise, the Insurance Industry Prepares for the Worst

Article excerpt

Historically, the debate on global warming has been dominated by two competing sets of concerns. On one side, environmentalists and the reputable scientific community have, for decades, warned of the ill effects of climate change, including the increased frequency and intensity of storms and the higher likelihood of disease. The U.S. Environmental Protection Agency (EPA) has forecast a 10- to 12-inch rise in sea levels during the twenty-first century. Researchers at Columbia University have predicted that ozone-related deaths in urban centers like New York will increase by at least 4.5%.

On the other side of the debate, business leaders have pointed out that reducing greenhouse gas emissions would slow economic growth, resulting in job losses and poverty.

Up until recently, the costs of global warming in economic terms have been seen as smaller than the costs of reducing emissions. That perception, according to a rising chorus of economists and insurance experts, has begun to change.

Evan Mills of the U.S. Department of Energy's Lawrence Berkeley Laboratory states that the world's total economic losses from weather-related catastrophes has risen to 25% of all insurance losses for the last decade. Ironically, the effect has been especially dire in the United States, a leading opponent of global climate change protocols. The United States incurred 40% of the total insurance losses during the 1990s.

"Global weather-related losses in recent years have been trending upward much faster than population, inflation, or insurance penetration, and faster than non-weather-related events," Mills writes in the journal Science. "Damages from U.S. storms grew 60-fold to $6 billion a year between the 1950s and the 1990s. As the climate changes, populations are moving into harm's way, but demographic factors do not appear to explain all of the increase."

According to Mills, the economic costs of weather-related events were felt across a variety of sectors, professions, and industries, totaling $1.4 trillion from 1980 through 2004. The insurance sector was particularly hard-hit during that period, losing more than $340 billion to environmental disasters. These numbers, Mills believes, are probably underestimated.

According to the EPA, the high monetary cost of these events is due two seemingly contradictory trends. …

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