Spiralling climate insurance claims

May 22, 2014

There has been a spate of low frequency high impact flood impacts over the past decade or so in US, Europe and Asia. Unfortunately there has been a high degree of bunching of these events which have made a mockery of all historical trends.

The past decade has seen an exponential growth in national flood insurance claims in US. Katrina, Rita, Wilma and Superstorm Sandy have pushed the debt of the insurance companies by $24 bn since 2005. Earlier the claims which were minuscule compared to these we're funded by premiums and federal subsides. There are increasing cases of double and multi claims.

With steadily rising seas, more super storms, tornadoes and twisters, etc it is going to be difficult to meet the catapulting insurance claims. The position in Europe and elsewhere is worse. Steep premiums beyond affordability are a possible solution. But how many can afford the new premiums? It's really a Hobson choice. Climate is truly a frightening game changer. Mankind is a helpless spectator.