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

Question

Because there are more storms, bush fires , and droughts in Australia due to climate change, are insurance companies making more money because people want to be insured in case something like that is very likely to happen because of climate change?

Answer 1

As they start to make losses, they will put premiums up, but they will not pay out in a lot of circumstances because they can use the "act of God" clause.

There are many homes in the UK that cannot get insurance if they have been flooded once - they are not a good risk to make money on.

Personally rather than pay £90 / month for "some" insurance (they never give you 100%), I would run without.  As long as I don't get burgled less than every 10 years, I'm better off.

Answer 2

Didn't you like my first response?

There are not "more storms, bush fires , and droughts in Australia due to climate change".

None of these events is due to 'climate change', they are just happening... (go check the history, look around 1835/6) and the only reason they are in the forefront of public opinion is that the media needs to sell paper.

That is why the insurance comapnanies will prosper.

Answer 3

Aaah... that's better!

Not sure I have to say. But my guess is yes, in the short run, and no in the long run, just like the oil companies and airlines.

Individual companies of course have different profitability

There is a 'lag' factor - higher payouts due to more disasters detract from profitability but that, in turn, means higher premiums in subsequent years but how to account for payment on a policy today (higher profits today) that mean a greater (but unknown) liability tomorrow?

And we still have the problem of sorting out what 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? As well as which policies were bought due to GW concerns and which would have been bought regardless?

Some of the sources I quoted last time are still applicable:

The Association of British Insurers: http://www.abi.org.uk/Display/Display_Po...

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

IAG: http://www.wwf.org.au/publications/acg_s... & http://www.dpi.nsw.gov.au/__data/assets/...

Lawrence Berkeley Labs: http://insurance.lbl.gov/

Insurance Council of Australia: http://www.insurancecouncil.com.au/

As for DaveH, it's not the meida who say there has been more "storms, bush fires, and droughts" but the insurance companies who are paying out, the Australian government who are making policies because of that and the Australian people... oh, and they base that on facts, not opinion (see P.21 of http://www.wwf.org.au/publications/acg_s... for example)