Expect Insurance Rates to Go Up Due to Global Warming

Global warming is driving up the cost of responding to natural disasters, and that will mean higher insurance premiums, according to Bloomberg.

Munich Re, the world's second-largest insurer of insurance companies, said natural disasters cost insurance agencies $30 billion in 2007 – twice the loss in 2006, but still below the record levels of 2005, when Hurricanes Katrina and Rita led to $99 billion in losses. (The actual cost of the disasters was higher still, at $75 billion.) The largest re-insurer, Swiss Re, put the loss to insurers somewhat lower, at $25 billion.

The number of catastrophes, 950, was higher than ever recorded by Munich Re, which has kept tabs since 1974. It is the larger number of small catastrophes, rather than the prospect of more major catastrophes like Hurricane Katrina that have prompted these re-insurers to warn of the risks of climate change, both in the here and now and in the near future.

These global re-insurance firms have been in the lead, when it comes to corporations assessing the true potential costs of global warming. In the past couple of years, U.S. insurance agencies have begun responding, and insurance rates for homeowners in hurricane- or flood-prone areas, for instance, are facing higher premiums or being squeezed out of the market altogether.

COMMENTS ()