The Wall Street Journal had an article and a video clip this past week about how the insurance companies that cover hurricane and tornado damage are finding ways not to pay out as much or as often as had been true in the past. Since I do not subscribe to the WSJ, I cannot provide any additional details. The net result is more personal hardship for property owners in Moore, however.
Here is some additional information about insurance from CNBC, and this article is not kind to the U.S. insurance industry. See: Why Insurers May Be Unprepared for the Next Big Storm. Some excerpts follow:
Hurricanes, droughts, tornadoes, wildfires … extreme weather is threatening to take bigger chunks out of insurance companies and yet the industry, in the eyes of experts and consumer advocates, isn’t making any preparations … other than raising rates.
“I can’t think of another industry that’s more directly affected by the weather changes,” said Professor Anant Sundaram of Dartmouth’s Tuck School of Business. “They need to get out in front of this. It comes down to more than just raising premiums on customers. It’s being pro-active and thinking ahead.”
Eleven extreme weather events each caused at least a billion dollars in losses last year in the United States. Loss estimates for Hurricane Sandy alone are at $50 billion, of which insurance company damage payouts are said to be close to $20 billion.
Insurers acknowledge that extreme weather or climate change has become the new normal. But a new survey says that many firms are not prepared for future super storms that could affect their industry, while homeowners and businesses suffer raising premium rates.
According to an industry wide report from Ceres, a non-profit group that works toward better business practices, only 23 of 184 U.S. insurance companies have comprehensive climate change strategies that could help mitigate the damaging costs from extreme weather to the industry and consumers. (Read More: World’s Best Places to Live)
“Insurers are starting to think about climate change from their losses but I’m not sure they realize how much of a financial threat it is to them,” said Peyton Fleming, a spokesman for Ceres.