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2013-05-14. For Insurers, No Doubts on Climate Change.

posted May 24, 2013, 1:35 PM by Alan Gould
Eduardo Porter, New York Times. For GSS Climate Change chapter 7. Excerpt: If there were one American industry that would be particularly worried about climate change it would have to be insurance, right? ...From Hurricane Sandy’s devastating blow to the Northeast to the protracted drought that hit the Midwest Corn Belt, natural catastrophes across the United States pounded insurers last year, generating $35 billion in privately insured property losses, $11 billion more than the average over the last decade. And the industry expects the situation will get worse. “Numerous studies assume a rise in summer drought periods in North America in the future and an increasing probability of severe cyclones relatively far north along the U.S. East Coast in the long term,” said Peter Höppe, who heads Geo Risks Research at the reinsurance giant Munich Re. “The rise in sea level caused by climate change will further increase the risk of storm surge.” Most insurers, including the reinsurance companies that bear much of the ultimate risk in the industry, have little time for the arguments heard in some right-wing circles that climate change isn’t happening, and are quite comfortable with the scientific consensus that burning fossil fuels is the main culprit of global warming. “Insurance is heavily dependent on scientific thought,” Frank Nutter, president of the Reinsurance Association of America, told me last week. “It is not as amenable to politicized scientific thought.” ...the industry’s analysis of the risks it faces is evolving. One sign of that is how some top American insurers responded to a billboard taken out by the conservative Heartland Institute, a prominent climate change denier that has received support from the insurance industry. The billboard had a picture of Theodore Kaczynski, the Unabomber, who asked: “I still believe in global warming. Do you?” Concerned about global warming and angry to be equated with a murderous psychopath, insurance companies like Allied World, Renaissance Re, State Farm and XL Group dropped their support for Heartland. ...Eli Lehrer, a Heartland vice president who at the time led an insurance-financed project, left the group and helped start the R Street Institute, a standard conservative organization in all respects but one: it believes in climate change and supports a carbon tax to combat it. And it is financed largely with insurance industry money. Mr. Lehrer points out that a carbon tax fits conservative orthodoxy. It is a broad and flat tax, whose revenue can be used to do away with the corporate income tax — a favorite target of the right. It provides a market-friendly signal, forcing polluters to bear the cost imposed on the rest of us and encouraging them to pollute less. And it is much preferable to a parade of new regulations from the Environmental Protection Agency. ...“We are having a debate on the right about a carbon tax for the first time in a long time,” Mr. Lehrer said. ...global warming isn’t just devastating for society, but also bad for business.... http://www.nytimes.com/2013/05/15/business/insurers-stray-from-the-conservative-line-on-climate-change.html.