Have insurance companies been getting better money due to climate change.?

Question

I have to do a essay on climate change and i would like to know that if you own an insurance company then would you get more money due to what climate change is doing

Like climate change is making more bush fires, storms, and droughts!

By the way i need to know this about Australian companies not world wide.

thanks

Answer 1

Your question is a little confusing and complex...

Confusing because the term "better money" isn't an economic term.

If you mean 'have revenues from natural disaster policies gone up in recent years' the answer is probably yes.

If you mean 'have profits from insurance of natural disasters (policy revenue less claims) gone up in recent years' then the answer is probably no - there have been a lot of expensive pay outs recently.

Complex because who can categorically state that any specific bush fire, storm or drought is due wholly or partly to climate change (there is poor land management, over exploitation of water resources, arson, etc) and if partly, to what percent?

Your essay should explore all the various arguments pro and con and not look for a simple yes-or-no answer. Because of this, I suspect Y!A is not the best place to do your research (you may want to start by looking at share prices of major Australian insurance companies).

Good luck!

Edit:

I just had to respond to Ben O when he says that inusrance company managers or business people are not taking global warming into account - of course they do!

The Association of British Insurers have stated that "climate change is already with us" and that "the insurance industry needs to work with the Government and key stakeholders to reduce risks before the most serious impacts of climate change begin to be felt.  Unnecessary costs and damages could be avoided by ensuring that climate change is [considered] at an early stage"

http://www.abi.org.uk/Display/Display_Po...

40 major international insurance companies have founded ClimateWise to look specifically at the impact of climate change on the insurance industry

http://www.climatewise.org.uk/associate-...

The Insurance Australia Group (IAG), in conjunction with WWF,  has produced a lengthy document that fully supports the theories and concerns of AGW.

http://www.wwf.org.au/publications/acg_s...

IAG also did a presentation to Australian insurers explaining "why climate change is important to insurers" and the fact that climate change may cause a negative impact on the Australian economy of up to A$60bn or 10% of GDP

http://www.dpi.nsw.gov.au/__data/assets/...

There's a good, high-level, economic paper concerning the ramification of global warming to the insurance industry by the Lawrence Berkeley Labs but it isn't Australia-specific

http://insurance.lbl.gov/

I simply don't undertsand how he can say that there isn't "one single business magazine or newspaper that has ever run a climate change alarmist story":

Wall Street Journal: "About 25% of Fortune 500 companies now have a board committee overseeing the environment" due to "rising investor worries over global warming" http://online.wsj.com/article/SB12184035...

The Economist ran an "alarmist" GW article that, amongst other things, warned polluting companies that they may be in violation of trading regulations because they are not transparent enough about the economic impact of GW

http://www.economist.com/business/displa...

The Economist ran another "alarmist" GW article describing economic, social and environmental concerns http://www.economist.com/opinion/display... and another that noted that 2/3 of Australians want emissions cut due to AGW http://www.economist.com/world/asia/disp...

The Business Council of Australia "has agreed on a policy position to tackle climate change" http://www.bca.com.au/Content.aspx?Conte... and the Insurance Council of Australia has released their annual statement that addresses the impact of GW on insurance companies http://www.insurancecouncil.com.au/

Even the Australian (yes, a conservative, big-business newspaper) has run articles that support AGW theories and warn of negative impacts:

http://www.theaustralian.news.com.au/sto...

http://www.theaustralian.news.com.au/sto...

http://www.theaustralian.news.com.au/sto...

http://www.theaustralian.news.com.au/sto...

CPA Australia talks of the fact that "climate change [is] an issue of business and economic survival" as does KPMG of Australia, both well respected accounting-business organisations http://www.cpaaustralia.com.au/cps/rde/x...

http://www.kpmg.com.au/Default.aspx?TabI...

Nicholas Stern, of the UK treasury has written a comprehensive policy document on the economic impact of AGW: http://www.cambridge.org/catalogue/catal... Similarly the House of Lords Select Committe on Economic Affairs did a study on the negative economic aspects of AGW http://www.publications.parliament.uk/pa...

Answer 2

What an interesting question... one of the economic implications of ‘climate change’.



Unfortunately I have nothing authoritative to give you, only my observations and opinion.

I’m answering from New Zealand where we have very similar prevailing economic and political positions. The only significant difference between the two (apart from scale) is that Australia has very significant mineral wealth, which New Zealand does not.

The Governments of both countries have strongly endorsed their Kyoto commitments and committed their parties and countries to CO2 reduction. They have both done this to win the ‘green’ vote.

That done they are now committing both countries to Emission Trading Schemes (a different discussion).  

All of this political positioning supports the media lust for sensationalism, thus any unusual weather event is now due to global warming... with the media  only reflecting/reinforcing  the Governments view.

So, and it’s taken me a while to get there... much of the general public now believes that ‘catastrophic’ events might be coming, and some will be more inclined to seek extra security through insurance.

This I suspect may yield a very significant lift to the insurance industry. Whether or not Global Warming is real or not, and whether it will or will not bring catastrophic results, the insurance industry will still be able to stand behind ‘act of god’ whilst still taking the (probably increased) income.

Yes, I think that the insurance companies will do well out of ‘global warming’.

Thank you for making me think about this. I look foward to reading the other responses.

Answer 3

I don't think the management of insurance companies believe that human effect the climate in any significant way.  

I don't think there is one single business magazine or newspaper that has ever run a climate change alarmist story.  Take a look at 'The Australian' or 'The Asian Wall Street Journal' which a lot of Australian managers and executives read.  They are very critical of the climate change movement.  

The newspapers which are alarmist about climate change are designed to appeal to a different demographic.

(edit)  

I'm sure Adam C's ideas fit in with university campus politics, but if he thinks the business community thinks like that - he is mistaken.

The links to insurance company sites reflect that insurers are interested in the science of climate - but they've never claimed that human activity will have any major effect on the climate.

Is that the closest the Wall Street Journal has come to climate change alarmism - some investors believe in it?  That's alarmism but not about climate change, it's about too many people believing in it.

There is also some alarmism about having to pay tax on something that many people don't believe exists.  For skeptics that is a cause for alarm, but it's not climate change alarmism.  

See the quotes from the Australian:

'The Coalition's immediate and predictable response was that Garnaut was on "another planet" and petrol price rises above the $1.70 a litre already imposed by the global oil price shock were unacceptable.'

Quoting the government 'expert' on climate change and then mocking him is hardly alarmism, except that for skeptics it is alarming that the government is employing people who take it seriously.

Nicholas Stern is with The World Bank and the UN position on climate change is clearly alarmist - or at least it was until Ban Ki-Moon visited Saudi Arabia to lobby the Kingdom to increase oil output.

Answer 4

from my personal experience,here is a good resource that is worthy of your time.

http://insurance.freetipz.info/insurance...

Answer 5

Sure they have.  When you have the UN and the US government making statements like there's going to be more and stronger hurricanes striking the US because of "Global Warming", people listen.

Insurance is about managing risks.  When government "scientists" and politicians make statements that the risks are increasing, then so do people's premiums.

Even though it's been years since a hurricane has struck the US, the government "scientists" are still making wild claims like we only have 100 months left.  I have no doubt they must own shares in these companies and are just talking up their own profits.