HURRICANES Responses to questions
Why are some U.S. insurance companies withdrawing from U.S. coastal markets? Where
there are major costs from damage claims, insurance rates must go up to cover them. Insurance companies can’t print money; they are not the government. If the industry can’t make commercially acceptable returns on its practice, and can only turn losses every year, it withdraws from those markets.
Doesn’t insurance profit investment cover
extreme events? No way. Cumulative investment funds are pretty stable, static. When there are new, large insurance claims, the only way to cover them is through premiums. The static investments don’t generate enough cash flow to cover large claims.
What about social responsibility? All annual UK company reports require a section on social responsibil- ity. Major investing institutions now pay attention to the social responsibility demonstrated by firms, not only financial performance.
What does the recent “Green development”
book say? It points out that businesses have the business advantage to “green” development, dah. For meaningful actions by corporations, major investment institutions review the “greenness” of corporations in the UK.
Do you have recommendations to accom- modate political pushback? The evidence of climate change is now overwhelming. The number and significance of serious players who acknowledge climate change is rapidly growing, even if it is inconvenient to believe it.
Why should companies behave in an envi- ronmentally responsible way? If we do environ- mentally responsible work through pollution reduction, it will be a good thing in itself for human health and welfare directly, regardless of reduction of climate change extremes. A lot of people don’t believe it, and say it’s a waste of money to address climate change. The politics of it is knotty, and needs orientation, education, promotion of sound environmen- tal management.
What can be done to improve buildings in the East coast? Encourage modern building designs and siting on the U.S. Atlantic coast. It can be done if buildings meet the new codes, their insurance rates should go down.
Do other insurance lines offset natural disaster insurance? The industry can’t really have cross-subsidization. It can’t raise automobile insurance to cover wind storm losses. Some offsets are possible – say New Zealand earthquake insurance is offset by global terrorism insurance.
Do poor countries suffer from lack of insur-
ance? Yes. Small and poor countries generally don’t have insurance, like in Central and South America. This is likely to remain so. Consider that 3,000 people were killed in 9/11 and insurance was in play; while 227,898 died in the Aceh
www.aipg.org Jul.Aug.Sep 2020 • TPG 31
tsunami with no effect on the insurance industry as none were insured. The Chinese insurance market is growing rapidly; 25 years ago, China was a poor, undeveloped country with no insurance industry.
Who insures man-made catastrophes? Government insurance often covers man-made events like terrorism, anthrax releases. The insurance industry works with public-private partnerships in such events.
Would the insurance industry invest in restoring coastal areas? The industry gets income form sales and couldn’t afford to restore coasts. This should be done by the public sector.
What is the reinsurance risk/elasticity of
reinsurance markets? Reinsurance risk is significant. The world insurance industry is huge and survives by balanc- ing worldwide risks under commercially acceptable terms.
References
Helfand, David J. February 23, 2019. Climate Change, Nature, and the Environment: What We Know and What We Don’t. Arizona Daily Star’s One Day University, Tucson, Arizona.
HydroVisions, 2008. Branch Activities. Spring 2008, Vol. 17, No. 1
About the Author
Barney Paul Popkin is retired and was a CPG, California Registered Environmental Assessor and Professional Geologist, and Georgia and European Federation Geologist. He has worked on hurricane recovery and reconstruction assignments in Houston’s 2017 Hurricane Harvey through FEMA, Cul-de-Sac/Haiti’s 2008 Triple Hurricanes and Bicol, Philippines’ 2006 Super-Durian Typhoon through USAID. He also worked on similar assignments for South East Asia’s 2004 Boxing Day Tsunami, Kashmir/Pakistan’s 2005 Earthquake and Port-au-Prince/Haiti’s 2010 Earthquake through USAID. Mr. Popkin participated in several hurricane conferences, workshops and briefings in South East Asia and Washington, DC. As a USGS Texas District Hydrologist in the 1960s, he personally experienced the tail ends of several Texas Gulf Coast hurricanes during which he gaged streams in hand- drawn cable cars and crossed flooded bridges with caution, accumulating many memorable experiences.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64
