"The Market Won’t Clear–Neither Will The Weather"
Climate change is starting to affect Insurance companies, and the media is starting to notice. The Washington Post recently ran a long article expanding on the themes in a Plenty magazine piece.
The Post‘s “A Dream Blown Away” describes some of the insurance industry’s lingo that sheds light on the conundrum companies are facing. For example:
‘Insufficient capacity’ and ‘the market won’t clear’ refer to climate risks so difficult to calculate that traditional commercial providers won’t sell you new insurance or renew your old insurance at any price.
Allstate insurance has suspended new coverage in Manhattan, Brooklyn, the Bronx, Queens and Staten Island, even refusing to renew coverage in particularly vulnerable zones, according to the Post‘s article. Why? they are worried about a
Category 3 [hurricane] funneling straight north up New York Harbor. Pushing a wall of water perhaps 15 feet tall up Broadway toward the second-story windows of Wall Street.
As global warming warms the Atlantic, hurricanes will last longer and travel further from the tropics, so Allstate’s fears are not unrealistic.
The bottom line: The insurance industry is not so much preparing as it is running from the problem, given its financial interests. Even so, at least they are aware of the problem and taking precautions–a lesson that delayers, deniers and policymakers need to learn.