Re: Too Many Cars!/Insurers

RE: the inferences in the information forwarded by Patricia Dines (see below)

While I am also concerned that climate changes are taking place as  result
of human activities, the inference that increased losses experienced by
insurance companies is due to changes in the weather is not necessarily a
careful evaluation of the situation. An alternative reason for their
concern for the damages due to weather is the increase in insured
investment in these regions.

From personal experience in the Domincian Republic for example, I can say
that the number of vehicles and quality homes and property in general and
probably the number of insurance policies has increased dramatically in the
last number of years. As long as they had little investment in the region,
insurance companies were minimally affected by the damaging effects of the
weather in the region. As long as the value of the property insured was
low, their losses were minimal. But with increased value and quantity of
insured goods, their total dollar commitment puts them more at risk and
justifies investment in predictive tools and understanding of those risks.
The increase in uninsured losses also reflects "development" in these
regions and the intensification of structures and goods which are
economically valued that can be "lost" in weather-related disasters.

Sheryl Swink

>-- FORWARD ---
>From: Patricia Dines, 73652,1202
>Date: Wed, Jan 22, 1997, 2:04 AM
>Subject: Climate change; and list definition
>Hi all -
>Those interested in the facts about climate changes and its real costs
>might be interested in an article in the Jan/Feb 1997 issue of World Watch
>magazine, p.10-11.  On top of the world scientists saying there are real
>changes happening because of human pollution, are those ever-radical
>insurance guys!
>Certainly, I'd consider these about the most fact-based conservative people
>you could find, the least "radical".  This article discusses the real costs
>the increasing weather damage is costing them, how they're cutting back
>coverage to certain areas ("Areas of southern Florida and the Caribbean,
>for example, have become virtually uninsurable.), etc.  Franklin  Nutter,
>President of the Reinsurance Association of America is quoted as saying
>"The insurance business is first in line to be affected by climate
>change... [It] could bankrupt the industry."  As the article says, insurers
>set their rates based on past experience and the law of averages.  When an
>increase in frequency of occurence occurs, higher payments of huge sums
>amount, and this really messes with their income levels!
>The chart shows a clear and dramatic upward trend in economic losses from
>weather-related natural disasters worldwide from 1980-95, with variance,
>but clearly and dramatically increasing highs:
>- from 1980-4 (inclusive), two years are over $5 billion (at about $6 and 8
>- from 1985-9, 3 are (at about $6, $9, and $10 billion)
>- from 1990-5, all are, to a startling level ($15, $26, $36, $22, $22, $38)
>Them's facts folks, and it's not a pretty sight!  (Looks like it might be a
>log curve or worse!)
>(note: includes insured and uninsured losses, which says to me the
>insurance companies are doing pretty good at not carrying all these losses
>- but someone else is certainly paying them!  Causes me to reflect on the
>Lloyds of London crisis too, and wonder if it was related to these types of
>losses ...)
>(note: figures are approximate - I'm reading them from a graph.)
>The insurance companies are so concerned about this that 13 large
>re-insurance companies formed a new Risk Prediction Initiative to be run by
>the Bermuda Biological Station for Research in 8/96, which "will allow
>insurers to work with scientists to better understand the historical storm
>record and to develop improved tools for forcasting the effects of future
>climate change."  I doubt such conservative folk as this would go to this
>effort and expense if they felt there was no real crisis going on and it
>was just invented by some radical flakes or whatever derogatory term people
>use to not have a decent conversation.
>"More signficantly, at the July 1996 Conference of the Parties to the
>Convention on Climate Change in Geneva, a large delegation of insurers
>turned up for the first tie.[time]  Under the auspices of the U.N.
>Environment Programe, some 60 insurers, including multi-billion dollar
>companies... signed a statement calling on government to substantially
>reduce emissions of climate-altering greenhouse gases."
>Those crazy radicals!
>P. Dines
>P.S. For more info, contact World Watch, 1776 Massachusetts Ave. NW,
>Washington DC 20036 (202) 452-1999, worldwatch@worldwatch.org.  If you
>don't know this group, I recommend checking the out.  Their mags are often
>at newstands and the have a great yearly periodical called State of the
>World.  I find their quality of both research and relevant cogent writing
>to be some of the "best in the business."