Political Denial

While it appears that 74% of the Republicans in Congress publicly deny global warming, the insurance industry does not. The insurance industry trusts scientific research; many in Congress reject it. A recent story in the Bloomberg News is worth quoting at length.

Hurricane Irene’s residue is likely to include a confusing debate over whether insurers or property owners are responsible for storm-caused water damage. There’s no lack of clarity, however, over whether the insurance industry believes in climate change and its ties to lethal weather: It does.

As Bloomberg Businessweek reports in its Sept. 5 issue, the industry has absorbed many lessons from Sept. 11 about anticipating risk. One is that the recent spate of weather extremes is likely to continue — and the insurance market must reflect that.

Interestingly, this puts the industry at odds with a number of Republican candidates who have made questioning climate change a not-insignificant part of their campaign strategy. Rick Perry and Michele Bachmann dispute whether global warming is man-made. Perry suggests that climate is affected by many variables, which scientists can manipulate “so that they will have dollars rolling into their projects.” Mitt Romney is on the fence. Only Jon Huntsman Jr. has declared definitively that he trusts scientists on global warming.

Politicians have been known to dissemble about risk because voters generally don’t like to hear bad news. The insurance industry makes its money telling it to you straight — how long you’ll probably live, what price your home will fetch, whether to repair or trade in your car.

For this reason, it’s worth noting that insurers already factor climate change into their models for measuring, pricing and distributing risk. Insurers have no incentive to lie. If they are more scared than they should be in pricing risk, shareholders will punish them. If they aren’t scared enough, nature will do the job.

No one can say for certain that any single weather event flows from the warmer air caused by carbon emissions, which in turn lead to more rainfall, floods and snowfall over some parts of the planet, and more drought in other parts. But last year was the hottest on record. Arctic ice is at record low levels. Regardless of what politicians say, insurers must factor all this into premiums.

[Rick Perry’s comment is especially interesting. Apparently he thinks scientists doctor the facts so they can increase funding for their pet projects. The man has a lively imagination. I always wondered what motive reactionary politicians attributed to scientists for their dire predictions.  I know what motives to attribute to the corporations and politicians for denying the obvious — it’s all about votes and ultimately profits. This helps clarify things for me.]

But in the end, as Diane Keaton said, “Climate change, like gravity, doesn’t give a damn whether you ‘believe’ in it or not. It’s happening regardless. While we sit around and debate its existence, it’s taking full advantage of the situation and using the time we’re giving it to make life miserable.” Indeed so.


3 thoughts on “Political Denial

  1. Great post. Diane Keaton is smarter than many of the names mentioned in your post. Marsh is the largest insurance broker in the world and they have said global warming is the greatest threat facing businesses. Georgia State University has one of the better risk management and actuarial programs in the country and they have a curricula around global warming. And, not to be outdone, Mercer Investment Consulting got very large global pension fund managers together to study the cost of global warming on investment returns (you would think this would interest our GOP friends) and it is huge. They noted the fires, droughts, etc. were all exacerbated by global warming. It shows you how powerful the Oil/ Gas and other fossil fuel industries funding is. Just some more thoughts from the cheap seats. BTG

    • I really do think there are more politicians on the right who know damned well global warming is a given; they just can’t admit it in public. That’s what the editor of Sierra Magazine was saying in a recent editorial. Their silence is the price of taking money from Big Oil, I expect! Thanks for the comment, as usual.


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