This time it concerns the insurance industry. On Oct. 7‐not coincidentally just a few days after the American hurricane season reaches its peak‐the U.N.‘s Climate Change Working Group released a report called “Climate Change and the Financial Services Industry.” The predictable bottom line: Climate Change has the potential to destroy the insurance industry, so, America, please get in line with our view of climate change.
This kind of stuff comes from the top. U.N. General Secretary Kofi Annan keeps criticizing our reluctance to adopt the scientifically discredited Kyoto Protocol. In a recent op‐ed in the Washington Post that was his number one demand.
But the U.N.‘s new report goes Annan one further. While finally admitting that Kyoto won’t do much about the planet’s climate, the report then demands more and more and more Kyotos, in agreement with scientists in the Clinton administration who estimated that we need about 19 Kyotos to stop warming. One Kyoto costs, conservatively, 2 percent of our GDP per year. Nineteen? Don’t go there, unless you’re the U.N.
Specifically, the new U.N. report projects that, as a result of climate change leading to more frequent and severe storms, along with demographic changes (read: more people able to afford more expensive beach houses) worldwide insurance losses will total an additional $150 billion in the next decade. They trot out an impressive graph showing dramatic increases in damage costs in recent years.
What isn’t apparent, except to anyone reading the fine print, is that this figure lists damages from all “natural causes,” and that most of the recent increase is from two big earthquakes (1994 and 1995). While our greener friends like to blame many oddities on global warming, no one is crazy enough to say that it causes earthquakes.
Big European reinsurers (the people who insure the insurance companies), like Swiss Re and Munich Re, have been singing the climate change dirge for years. It forms a convincing argument for raising their rates, and their pro‐Kyoto (read: anti U.S.) governments are only too happy to nod in agreement.
By far, the biggest producer of weather‐related damage is the hurricane, and the largest exposure, in terms of insured property value, is the United States east coast, where the insured value is roughly the same as our annual gross domestic product. Further, damage costs appear to be going up. So, if the U.N. is right, the number or severity of hurricanes should be increasing dramatically.
It’s not. There’s no trend at all in the number of these storms striking the United States. In fact, the 1990s appear to be especially hurricane‐poor. It’s also well known to hurricane scientists that the average maximum recorded winds have been declining for the last half‐century.
The new U.N. document is so brazen that it contravenes another U.N. body, the Intergovernmental Panel on Climate Change. In its latest compendium on the subject, called the “Third Assessment Report,” which it likes to call the “consensus of scientists” (it’s really the “consensus of scientists picked by the U.N.”), says:
“There is little sign of long‐term changes in tropical storm intensity and frequency,” and “[r]ecent analyses of changes in severe local weather (tornadoes, thunder days, lightning and hail) in a few selected regions provide no compelling evidence for widespread systematic long‐term changes.”
As for the future, the U.N. climate report says that its climate models show no systematic changes in these storms.
While Munich Re, Swiss Re, and the U.N. Climate Change Working Group shill for a mutually interested, if falsified, climate apocalypse, who isn’t surprised that Americans have a different idea?
Let’s guess that there really is a free market here, and that U.S. insurers can choose between Munich Re, with rates artificially kited by fears of worsening climate, and some American reinsurer, whose rates are predicated on constant climate with increasing property values. Munich Re would advertise its product as more reliable, with assurance that it can survive our increasingly harsh climate. The Americans will be much less expensive. Given the facts, which would you choose?
Let’s predict that global warming hype isn’t going to put American reinsurers out of business, but that it could be very harmful to the economic well‐being of their European competitors. Hurray for American “Unilateralism.”