The Insurance Industry, soon to be the first pillar of Capitalism to succumb to Abrupt Climate Change

“Climate change could punch a hole through the financial system by making 30-year home mortgages — the lifeblood of the American housing market — effectively unobtainable in entire regions across parts of the U.S.”
“Climate change could end mortgages as we know them”

“Natural disasters are being recorded more frequently than ever before. “Since 1970, the number of disasters worldwide has more than quadrupled to around 400 a year,” and “there are six times more hydrological events now than in 1980,” The 10 Most Costly Natural Disasters of the Century
“There is a logistical hurdle: when a catastrophe bond experiences a so-called loss event, the capital in the investment is suspended until the full cost of a disaster is pinned down. The phenomenon of “loss creep”, where initial estimates of a loss balloon months or even years after the event, has also spooked some investors. The cost of Typhoon Jebi in Japan last year rose from initial expectations of $6bn to $15bn.”
“Over two years, natural catastrophes caused a record $225bn of insured losses”.
Why climate change is the new 9/11 for insurance companies

“For the insurance industry, global warming has advanced from a future ecological challenge to a present financial shock. Together, total losses to the economy from natural catastrophes and “man-made disasters” reached $165 billion in 2018; that followed a 2017 that, at $350 billion, cost more than twice as much. As a result, according to the Swiss Re Institute, the company’s research arm, 2017 and 2018 were for insurers the most-expensive two-year period of such catastrophes on record, requiring them to fork over $219 billion globally in checks.”
Climate Change Is Hitting the Insurance Industry Hard

“Regulators are starting to worry about climate change.”
“Jenkins points out that the Bank of England’s Prudential Regulation Authority is leading the way on stress-testing insurers against the risk that the world misses its carbon reduction targets.”

“In such a scenario, insurers, especially in the U.S. where price increases are restricted by regulators, may find it increasingly unattractive to offer coverage,” he writes. “Greater lay-off of risk to reinsurers is one option. But more restrictive policies or wholesale withdrawal of cover are also possible. At some juncture underwriters will need to remove their blinkers and acknowledge that a world awash with worsening climate change risks is not necessarily just bad for the planet. It could be bad for the insurance industry too. A bit like 9/11.” Climate Change Tops List of World’s ‘Extreme Risks’

“Venice is on its knees,” said Brugnaro. “The damage will run into hundreds of millions of euros.” Flood, fire and plague: climate change blamed for disasters
“Last year, insurance payouts caused by climate-related events totaled $2.4 trillion worldwide.” Can Insurance Companies Weather The Storm? What Climate Change Means For The Industry

Clearly the cost of disasters is on the same Hockey Stick trajectory as our climate crisis yet “Business as Usual” carries on as if nothing has changed. All ponzi schemes eventually implode and this one will be no different except in scale. There is no previous analogue to remotely compare with the coming collapse.

Activist, sailor, passionate about the earth and all it's inhabitants without favour . Brace for imminent impact as we bare witness to the non-linear unraveling of the biosphere and habitability disappearing for most if not all complex life on the only habitable planet we know of. To quote President Niinistö in North Russia: ‘If We Lose the Arctic, We Lose the World’. Folks we have lost the Arctic.

Posted in Abrupt Climate Change, Collapse, Insurance
12 comments on “The Insurance Industry, soon to be the first pillar of Capitalism to succumb to Abrupt Climate Change
  1. Marie says:

    Agreed! I’ve been thinking this for some time. Insurance companies stop insuring or go bankrupt, people default on home loans, banks start to collapse…. full blown recession, depression, collapse. Seems like a highly likely scenario.

    Thank you Kevin for sharing. I find all your articles spot on…

    Liked by 1 person

  2. […] My friend Kevin Hester wrote all this up a few weeks ago. you can read his roundup of such news at his website. But his sum-up of the situation is pretty direct: Clearly the cost of disasters is on the same Hockey Stick trajectory as our climate crisis yet “Business as Usual” carries on as if nothing has changed. All Ponzi schemes eventually implode and this one will be no different except in scale. There is no previous analogue to remotely compare with the coming collapse. […]

    Liked by 1 person

  3. Already happening. After 15 years on this property, the fire & homeowner cancelled 23 July permanently as my area of the Selkirk Range is now considered far too high a risk to make money on. And honestly that’s what it’s all about, large bags of money being made not paying out. The odds just shifted so the Big Boys just stopped insuring.

    Thanks for the $15,000 I’ve paid out the last 15 years without a claim and so long! It’s the only gambling I’ve ever done and I just lost? HA!

    Hey, the entire point of ‘insuring’ others is to make money not rebuilding people’s homes. After all, you don’t get those large bags of money when the collapsing climate burns everything up and you promised to rebuild everything.

    I think I mentioned this in another post somewhere on your site a few months ago? So here’s what I’ve found out since I was cancelled nearly four months ago.

    My local company’s policies were all underwritten by Mutual of Enumclaw out on the west coast. Huge underwriter, big corporate bucks, etc etc. I had early warning in a seriously apologetic phone call.

    Interesting that the caller is one of the co-founders of this local office and I was informed last week by another in the office of a retirement party coming up…six months after that 30 minute conversation. They probably cancelled half the office’s homeowner policies since this summer, and it’s ongoing.

    I’ve been talking climate to them for the entire 15 years. The last five they’ve been starting to come around…thinking about what was going on back in May and that’s what most of the conversation was about! Yeah, retire because…why not?

    No wonder the hedge fun logging ops are clear-cutting like locusts in these mountains. Gotta make money from the dead and disappearing forests before they burn. Of course that makes the fires worse, less atmospheric moisture or rain and drying rubble-oh my yes!

    Big Insure has known what’s coming for years. Munich RE was the world’s largest when I read about this, and they’ve been throwing warnings out about Global Warming for years.

    Paradise Cali is what caused MoE to cancel all these policies. They took a bath, that was the reason they cancelled… I’m guessing here from the statements, hints, and unsaid pieces of the conversation that, when I thought about them, it put together a picture said MoE probably had a bunch of underwriting down there, were holding a lot paper in Paradise when it burned. That fire was what? 7 billion dollars I think was the last figure I read. Probably went up since then.

    Bluntly, we ain’t seen nothing yet.

    sealintheSelkirks

    Liked by 1 person

    • 44 south says:

      “we ain’t seen nothing yet”…
      So true and applicable to just about every negative experience a human being can have.
      Not sure how many of us will have what it takes to endure what’s about to fall on our heads.
      Certainly got doubts about my own capacity in that regard, which is why I try to have a plan B,C and D to limit the hardships and trauma.
      The insurance industry can collapse as soon as it wants as far as I’m concerned, just hope the bureaucracy and the box tickers collapse and die at the same time.
      Got to be some up side to the collapse of industrial civilization don’t you think?;)

      Liked by 1 person

    • 44 south says:

      As if to add an exclamation mark to your post Kevin,on the 20th South Canterbury was hit by a severe thunderstorm along with golf ball sized hail.
      Damage was widespread “insurance companies were being inundated with claims”, Timaru doesn’t have enough materials in town to cope.
      Crop damage is also widespread, including a prize winning kitchen garden which was”decimated”.
      The gardener stated “I’ve never seen anything like it… I felt helpless”.
      All this from an extreme event lasting just minutes.
      Welcome to the future.

      Liked by 1 person

  4. 44south, I really don’t think there is an upside to what we see facing us. Or at least I’m unable to focus on any scenario where it could possibly exist. I mean, holy crap when even half the dots are connected in my mind! We are so far off the cliff down is up?

    But your thoughts on “Not sure how many of us will have what it takes to endure what’s about to fall on our heads” and having backup plans to backup plans…I don’t think is going to make a damn bit of difference how many plans you make or how much you think you can endure. No offense intended, but I just don’t think there is anywhere on the face of the planet that is going to be even relatively ‘safe’ from the ravenous hordes of starving primates once it really gets going. People are already batshit crazy, ya know?

    If Extinction #6 happens as quickly as it looks like it will since it already is on-going into feedback loops that make the last crashes seem quaint, what happened in local areas during all the other empire collapses will be planet-wide and probably brutally short once the grid goes down. There are plenty of people who run out and buy shopping carts full of frozen food when a hurricane is coming…even though they won’t have any electricity. It’s a species thing I think, lizard brain Amygdala(sp?) reactions!

    I thought this short letter from our galactic neighbors might be appropriate to read at this point in time:

    https://www.counterpunch.org/2019/11/21/open-letter-to-the-people-of-planet-earth/
    ____________

    And yes, Kevin, I still see this discredited 2100 AD timeline still popping up in all sorts of odd places. It’s so far out of the realm of reality as to be ridiculous at this point, but it makes people comfortable. Soothes their ruffled feathers and lets them get back to their tv show and the home shopping channel.

    It’s like that damned climate ‘change’ term that is constantly in use by people who should know better. Big sigh. I try to ignore it but I’m not all that good at that!

    -5/10C nights, 6C daytime. Clear blue sky again and no cloud cover with freezing fog and icy slip&fall mornings. Today it has stayed freezing fog all day as it is after 3pm and the trees are still wearing their white coats. Ice still on the ground and not just in the shade of the trees. It rained instead of snow last Tuesday and there is zero snow in the ski hill’s East Basin webcam, just brown dirt and green conifers. And it’s almost December. Snow is expected by next week but seeing as how Nat. Weather Service changes their expectations about every 36 hours, who the hell knows?

    The Deformed Jet Stream and the BLOB rule again this year obviously.
    ____________

    44south: Golf ball sized hail? That’s crazy! Extreme event is a very polite way to put it…unless you were actually out in it, then I’ll call it something a little more colorful. At terminal velocity one of those would knock you out or any other animal, smash out vehicle windshields, dent the hell out of normal metal roofing. No doubt that insurance claims are piling up fast! I wonder what Big Insure is going to do with all their moola when they close up shop and quit insuring anybody? Got to keep that corporate cash bringing in more profits! Maybe the US cannabis industry… 🙂

    sealintheSelkirks

    Liked by 1 person

  5. 44 south says:

    Update on our hail storm/extreme weather.
    Some ten thousand vehicles were hail damaged in and around Timaru.
    Cosmetic damage is one thing, irritating and costly to repair but…
    Because beurocrats are primarily interested in arse covering no matter what the cost to the public, these damaged vehicles are now being refused a warrant of fitness.
    Because of the cost of repairs, most of these vehicles are being written off at huge cost.
    Meanwhile I have days of work ahead of me as a result of a wind storm which savaged my place Sunday night.
    Seal… I have no doubt that you are right in the END. But there is a wealth of plain old hardship and suffering that can be mitigated or avoided with a bit of forethought.
    You might notice all my alternative plans go no further than plan D.
    D is for DEATH!
    I suggest we should all be thinking and preparing for an”exit” strategy (or three), I certainly have!

    Like

    • Too late for me, Kevin! And not in Washington State anyway.Amazon owns the coast and that’s where all the ‘decisions’ are made, not here in rural poverty-land.

      My retired Biologist/teacher neighbors were just cancelled like I was, with no warning except my telling them what my local agent whispered to me about causes. I seemed to have been the first along this ridgeline to get dropped…at least that I know of. But they’ve never missed a premium in 45 years and their fiscal year came up this month and POOF it goes.

      I’m sure the insurance industry is going to sue and with all the neoliberal corporate judges in place over the last 40 years…I’m expecting that rule to be overturned. One out of five Federal judges are now Trump appointees and the unSupreme Court are out and out Fascists. And doesn’t the corporate rulebook explicitly state that the boards of directors are required to make a profit? And the market shall decide what is good for profits?
      _________

      44south: Ten thousand vehicles get listed as totaled and bureaucrats are being…politicians covering their butts? Why is that no surprise! But that’s freaking crazy to just, what, junk them? Or are people going to drive them anyway? I don’t understand what ‘warranty of fitness’ means… Here you can drive a car that’s been ‘totaled’ by an insurance company but it’s listed that way on the pink (ownership) paperwork.

      And you are buried in repair work from a wind storm that savaged your place. Must have been one hell of a blow! I’m sad to hear you were hammered like that. I deal with the same kind of problems on this forested property, too. Had a 90 foot+ (umm, 30 meter +?) Ponderosa snap a third of the way up and was literally flung over the dog run fence by the force of the wind. My dogs are free range except when I’m gone off the property and this tree is the shade in their 7.5x15meter run next to the shop. It was a massive t-cell windstorm a number of years ago, just came freaking roaring in like a wall. The flung piece missed the corner of my shop building by less than 4 meters…it of course became firewood. Just luck that the angle of the wind was more south than from the west or it would have crushed the shop.

      I was watching from the pitch-black music room windows, power was out of course, and in one flash of lightning the tree was there bending like a straw, the next it was a stub. And no way was I going out to see what happened! Hurricane-force wind gusts that night…

      Now since I don’t have insurance any longer, whatever breaks or burns is my problem. I sure could use that $15,000 I sent the insurance company the last few years. You know, just in case?

      And yes 44south, I’ve thought about the what-ifs but I’ve done what I could with what I had to work with in materials, my skills, and the limited finances over the last 15 years here. One thing I wish I had but can’t afford is a hand pump for my lower well. They are dang expensive but it’s only 90 feet down into an underground river. But without electricity no water, and my solar is unreliable at this point. Batteries need replaced and I don’t have the income anymore. But we do the best we can, yes?

      D is for Death. Yeah, well, we can definitely expect that to come barreling along at one point in this collapse and probably for the majority of the population of this planet. Or all of us if we really are that stupid.

      If the climate just tips the hell over from ongoing disasters to a serious ‘instant’ catastrophe? Maybe no harvest in the US Midwest one Fall as all the crops burn up or drown in floods (both likelier than I’d care to admit) much like what has been happening in Africa. There isn’t much mitigating with alternative plans if that happens. By December there WILL be starving hordes raiding the countryside once the cities are picked clean as a skeleton and the military and police forces desert to go protect their own families…

      I’ve wondered if the reason for turning US cops into heavily armed local para-military forces (not that they weren’t always that in the first place) complete with their own tanks and grenade launchers has something to do with ‘just in case we need to cage everybody’ thinking by the Neoliberal wealthy who control this country… I mean, the wealthy ARE building bunkers and stockpiling, that’s a fact. Buying up New Zealand and shipping pre-fab concrete put-togethers from that outfit in Texas to the properties; in Patagonia on top of aquifers (Bush Family 800,000 acres and the Sung Yung Moon Church on the million acres next door. Missile silos being converted to refuges for the ‘just millionaire’ types who can’t afford bigger…too much info to list here.

      Exit strategy. That depends on circumstances, doesn’t it? Another big sigh. I ain’t gonna eat people no matter how hungry I get.

      sealintheSelkirks

      Liked by 1 person

      • 44 south says:

        The latest installment of the extreme weather news from 44 south is that last night we had a 12hour thunderstorm from 6pm to 6am that dropped over 2 inches of rain on my place.
        The south island of NZ is currently cut in half to vehicle traffic by flooding and slips on the west coast and the Rangitata river on the east coast.
        An emergency has been declared and mandatory evaluations ordered.
        About a week ago I bought my first 4 wheel drive, a cheap 1992 Nissan. An extreme weather vehicle. I think I got the timing about right. And no it’s not insured.
        My dogs kept real close through the storm last night, happy I was a comfort to them as they are my early warning devices and security most of the rest.
        Next year is going to be a doozy! Best of luck to one and all.

        Liked by 1 person

  6. Another use of that discredited 2100 AD meme, from the WMO this time, pops up. Interesting the article used the term ‘climate crisis’ rather than ‘climate change’ except for the 4th to last paragraph, and Dr. Joanna House of the Cabot Institute of the Environment at University of Bristol SHOULD have known better to use it!

    After Hottest Decade Since Records Began, WMO Warns World May Face 5°C Rise by Century’s End
    The impacts of the climate crisis “are real and happening now and place huge pressures on communities and countries,” climate scientists said.

    https://www.commondreams.org/news/2019/12/03/after-hottest-decade-records-began-wmo-warns-world-may-face-5degc-rise-centurys-end

    Liked by 1 person

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Kevin Hester

Kevin Hester is currently living on Rakino Island, a small island in the Hauraki Gulf near Auckland, New Zealand, monitoring the unravelling of the biosphere and volunteering at the Rakino Island Nursery is currently developing a proposal to create a marine reserve near by. The Island has no grid tied electricity or reticulated water.  I catch my own water from the roof and generate my electricity from the ample solar radiation on the island.

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