Charles Carreon, The Arizona Kid

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Re: Charles Carreon, The Arizona Kid

Postby admin » Sat Jun 22, 2019 6:33 am

To Get the Straight Dope on Climate Change, Talk to the Insurance Industry
by Charles Carreon
May 20, 2019

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The reports from the insurance industry are in, and the conclusions are clear: extreme weather events that cause damage to real estate and business, including high winds, enormous wildfires, and storm damage and flooding due to increased precipitation have caused claims for property damage to increase worldwide. These people are "risk managers," and it is their job to "set loss reserves," using "actuarial analysis" to estimate future losses and set insurance premiums at a level to accomplish two goals: (1) to have enough money on hand to cover anticipated claims, and (2) to encourage policyholders to protect their property to reduce risk by incentivizing investment in proactive, damage-reducing strategies. See the following resources to confirm:
The Impact of Climate Change on Insurance Against Catastrophes by Tony Coleman (an Australia-based analysis) https://www.actuaries.asn.au/Library/Ev ... eman7a.pdf
“Stormy Future for U.S. Property/Casualty Insurers: The Growing Costs and Risks of Extreme Weather Events,” https://docs.google.com/viewer?url=http ... _cw_01.pdf
Getting Reserve Analysis Right, by David Hershey, https://riskandinsurance.com/getting-re ... sis-right/
How Should We Account for Climate Change? https://www.ey.com/Publication/vwLUAsse ... change.pdf
Climate Change Risk & Insurance Casualty Actuarial Society: Casualty Loss Reserve Seminar Chicago , September 2016 Cynthia McHale, Insurance Program Director, Ceres
https://www.casact.org/education/clrs/2 ... eynote.pdf
The Insurance Industry and Climate Change on the Prairies: A Status Report Prepared by the Great Plains Program of the International Institute for Sustainable Development,
https://www.iisd.org/pdf/insurance_climate.pdf

While politicians would like you to think that their policies are the important ones, Adam Smith's invisible hand exerts far more control over the way we deploy resources on planet earth. One rule to observe in business is "That which cannot be insured should probably not be done." Currently, insurance companies are quietly working to account for the risks that climate change will cause to eventuate, increasing damaging events. A review of the above-cited resources will show that insurers are not "hedging their bets" in the belief that "climate change may cause an increasing number of casualty claims." Rather, they have received the news, in the form of drastic increases in claims due to increased extreme weather, charts that show disappearing ice pack, increasing average heat temperatures, hotter and larger forest fires, higher winds, precipitation, and rising sea levels. The insurance carriers have got the message, they've hung up the phone, and they are working on their spreadsheets to try and figure out how they can charge premiums that are high enough that they will be able to pay out the claims they know are on the rise.

Government has often silenced the wisdom of the insurance industry by providing relief to dangerous industries. For instance, the Federal Government enacted the Price-Anderson Act in 1957 to make the government the insurer of last resort for uninsurable nuke plants, and in the event of a nuclear accident, the Federal Government will indemnify insurance companies that issue policies to nuke plants. The law also limits total liability to $10 Billion, adjusted for inflation, a grossly inadequate amount in the event of a severe disaster.

A grosser way of sponsoring dangerous activities is to outlaw liability claims altogether, for example, claims that a gun is defective for failing to incorporate good designs to prevent injury: "For an example of how this plays out, look at Adames v. Beretta. In this case, a 13-year-old boy removed the clip from his father's Beretta handgun, believing that made the gun safe, and then accidentally shot his 13-year-old friend. The victim's family sued Beretta, saying the company could have made the pistol safer and provided more warnings, according to SCOTUS Blog. Citing the PLCAA, the Illinois Supreme Court dismissed Adames' claims, and the U.S. Supreme Court ultimately refused to hear the case." https://www.npr.org/sections/itsallpoli ... r-behavior

The most important thing for the government to do would be to bring the insurance industry's conclusions out in the open, to bring these executives before Congress, and put their conclusions on the record. In the safety of the Congressional hearing environment, these executives can tell us what they know, without the fear that a Fox News-powered shitstorm will break upon their heads, resulting in the loss of business merely for speaking the truth. There is no wisdom in ignoring what the most conservative financial minds in our society are acting upon. We should invite them to share their strategies with government, industry, and the people at large. Then we can all protect ourselves, and make the adjustments to our lifestyles, industrial planning, and global investment that are necessary to reduce the impact of extreme weather events due to climate change. That will, in turn, help us keep our premiums down, and both the insurers and the ratepayers will be grateful for that.
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