Is the Insurance Industry Exploiting Global Warming?

While I was on vacation, a fascinating piece on the insurance industry’s attempts to quantify global warming in the L.A. Times  (registration required) ran last week. Although well-researched and thick with thought-provoking quotes from scientists, insurance industry experts, and skeptics, the piece by Michael Bustillo couldn’t seem to decide if the reinsurance industry’s fears of increasing numbers of expensive disasters were justified. But it did conclude by suggesting that the more spectacular aspects of global warming, including potentially stronger hurricanes, may turn out to be less significant than smaller pestilences, such as insects and diseases.

At Harvard University’s Center for Health and the Global Environment, scientists funded by Swiss Re are studying how rising temperatures could spread diseases such as West Nile virus and allergens such as ragweed pollen, driving up costs for the health and life insurance industries.

They also are examining whether ecosystem changes caused by warming could have major economic effects — how collapsing coral reefs could leave oceanfront hotels prone to damage from tidal waves, for example, while bark beetle infestations could turn timberlands into tinderboxes.

Extreme weather may be the most sensational consequence of global warming, but scientists say that for insurers, it may not be the worst. Sudden changes caused by global warming, such as disease and pestilence, could have more long-lasting effect.

"We have not really appreciated how climate change could have some of these effects," said Paul R. Epstein, the Harvard Medical School instructor heading the study. "It may sound alarmist, but what is being discussed increasingly is the potential for surprises and nonlinear events. Things are changing faster than we thought."

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