Climate Actuarially: What Are the Odds?

Clear away all the politics and rhetoric, and climate change risk is simply a numbers game. And the insurance industry has a lot of skin in that game.

Insurance premiums aren’t as sexy as solar cars and smart grids, but they may be more powerful when it comes to changing how people think about climate change. Globally, insurance companies control over $26 trillion in assets. By comparison, the U.S. gross domestic product is about $16 trillion. When a hurricane strikes or a river overruns its banks, insurers are on the hook. With so much at stake, they’ve obsessively followed climate change for a long time, and they make it their business to know the odds. So while politicians duke out climate policy in partisan battles and scientists struggle to make their voices heard, the insurance industry is doggedly stepping into the future. It is investing in the new science of event attribution, bringing big data to farming, and nudging politicians into the twenty-first century. Here, we bring you a glimpse into that future—where change is hard to deny.

How much is climate change to blame for extreme weather?

The Science of Risk
by Maggie Koerth-Baker

A lot of journalists think the public can’t possibly comprehend the complicated probability and risk assessments associated with climate change. Myles Allen thinks they’re wrong. There’s not much difference between explaining how climate change could contribute to a specific weather event and explaining how smoking for 50 years could contribute to developing lung cancer, he says. People understand what you mean when you tell them that smoking doesn’t always cause cancer and isn’t likely to be the only reason a cancer happens. Likewise, they can understand you when you tell them that climate change isn’t the cause of every weather disaster but is a contributing factor to many of them.

“The bigger problem is that the public has lots of things to think about and limited bandwidth, particularly for events far in the future or far away in the world,” Allen says. “But when an event affects them, personally, people are more than willing to focus on the role of human influence.”

Allen should know. It’s his job both to explain the role of human influence on weather events and to ascertain exactly what that role is. Read more…

 

The Climate Corporation’s hyper-local weather insurance

The Business of Risk
by McKenzie Funk

A decade ago, when David Friedberg was in his 20s and a product manager at Google, his daily commute took him past a bike-rental business on San Francisco’s Embarcadero. When the sun was out, he noticed, the shop was open. When it rained—and tourists stayed indoors—the shop was closed. Its business was almost entirely dependent on the weather. And that got him thinking.

Companies subject to the whims of the weather could be more stable—and more profitable—if they had a better way to manage the risk of the next rainstorm. Read more…

 

How to reform a disastrous disaster policy

The Politics of Risk
by Scott Gabriel Knowles

At a Port Monmouth, New Jersey, town hall meeting in February of this year, residents voiced their anger over the slow recovery from Hurricane Sandy. Governor Chris Christie took the opportunity to continue his feud with the National Flood Insurance Program (NFIP), the flood protection arm of the Federal Emergency Management Agency (FEMA). Channeling the crowd’s frustration, Christie let loose with a war cry: “FEMA is the new F word.”

Chris Christie’s New Jersey is a perfect window through which to view the madness of American disaster policy. Read more…

Illustration ©Daniel Horowitz

Recommended

Leave a Comment

Like-what-you're-reading-Donate2