As the threat of severe climate-change-related weather grows, many coastal areas are becoming virtually uninsurable. The Geneva Association, a global insurance industry research firm recently highlighted risk areas like the Florida coast and the United Kingdom as “risk environment[s] that [are] uninsurable.” These low-lying areas of land are in serious weather-related danger with the acceleration of global climate change and the increasingly more violent storms that go hand-in-hand.
The oceans have been rising at an accelerating rate over the past three decades. The report cites United Nations data that sea levels rose at a rate of 1.8 millimeters between 1961 and 2003, but rose at a rate of 3.1 millimeters between 1993 and 2003. This acceleration of rising sea levels is one of the major underlying causes of the increased strength and frequency of storms in the past few decades.
John Fitzpatrick, the association’s secretary-general commented, “governments [need] to invest more in flood defenses and tighten building restrictions in risk locations to mitigate the fallout from extreme weather hazards,” referring to recent catastrophes like Hurricane Sandy, which cost New Jersey roughly $65 billion. Another past weather disaster, the intense flooding in Thailand a year before Sandy, cost nearly $43 billion, but could have had less of a financial impact had certain precautions been taken.
Due to both rising oceans and government inaction, coastal areas are only going to become harder to insure. Despite the looming threats of super storms, people are still flowing into these high-risk areas, investing in homes and businesses. This presents a difficult situation for insurers, as there have been few new investments in flood defenses that could limit damages. Scott Bernhard of Planalytics, a company that studies the economic impact of weather, plainly puts it, “Statistically speaking, there’s no way to make money, is what it comes down to.”
To read the Geneva Association’s full report, click the following link:
To read a recent article about ‘Uninsurable Places’, click the following link: