Only gov't subsidized corporate welfare and taking houses off the market can keep insurance industry alive due to abrupt global warming crisis.
Florida was hit by the first of back-to-back hurricanes. Estimates suggest the total insurance cost of hurricanes Helene and Milton could be a jaw dropping US$55 billion.
In late September, heavy rainfall in Nepal caused floods and landslides. The United Nations reported that more than 200 people died and 4,500 were rescued. The capital city, Kathmandu was inundated. Insurance losses, however, were relatively low.
Meanwhile, Canada has experienced its most destructive summer in history with CA$7 billion in losses from floods and wildfires. The UK, particularly Wales, is currently experiencing flooding. Rainfall was unusually high in September and 2023 was that country’s wettest year ever.
In this context, questioning the insurance industry’s survival doesn’t seem far-fetched.
Government backed insurers - the last ones standing?
The chair of the inquiry, Australian Greens Senator Mehreen Faruqi, prefaced the question by stating that climate disasters are getting more intense and frequent.
She said to Christopher Wallace, CEO of the Australian Reinsurance Pool Corporation (ARPC), if this collapse happens, would state backed insurers and reinsurers, like the ARPC, be the only ones left?
Wallace said that his conversations with government and the insurance sector inform him that there is “enormous momentum” around “shared thinking on how to reduce disaster risk in the community.”
“The long term solution is to reduce the risk, not just to address the insurance premium,” said Wallace.
Insurers can “just walk away from the market”
The Actuaries Institute’s CEO, Elayne Grace, was the next industry stakeholder to face questions.
“Is there a risk that the insurance industry could actually collapse if the climate crisis continues, especially without a dramatic reduction in emissions?” asked the chair.
“In the most extreme situations, we’ll need to see property buybacks, which means properties need to be taken off market,” he said. “They’re not safe and they’re not financially viable, and property rights need to be withdrawn and reallocated to safer places.”
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