In the 26 July 2017 edition of Insurance Business, a staff reporter penned a prescient headline – Climate change: Can insurers take the heat? – with a challenge to back it up:
Climate change could lead to a larger market for insurers as more people seek protection from losses – but the higher probability of severe weather events could ultimately prove to be a bane for the industry.
We’ll examine disaster relief and then look from the past to identify future opportunities and challenges.
Predictions are becoming more predictable
Back in the day, predictions of weather events were not far from the Farmer’s Almanac and the intensity of pain from bunions.
However, the advent of supercomputers and analytic tools – with their massive computing, and data access capabilities – have improved predictions once storms have formed.
And provision of relief is vastly improved by technology
The front end of any large disaster relief activity is to determine what happened, where it happened, and how much money and resources are required in specific areas. In the recent Hurricane Harvey event in Houston, CoreLogic – a property information, analytics and data-enabled provider to the insurance industry – was able to produce data for the impact, and the level of insurance in the areas.
With the high level estimates, immediate relief – Food, water, shelter, family re-location, public infrastructure – can be initiated quickly in most instances.
But what was missing is still missing…
Back in the 1970s, I worked as a ‘disaster specialist’ for the American Red Cross. As I listened to the coverage of Harvey, I thought of a long ago assignment: a “rain event” in Houston in June 1976. It didn’t have a name, but it was a mess on arrival with 13″ of rain in six hours. Along with other agencies, the Red Cross was there to assess damage and provide assistance.
I don’t have my journal from that time, but I found a TV station website – KHOU 11 – that asked listeners to reflect on the day 35 years prior:
A listener named “hunter” wrote:
- “It was in June, and was a day, like so many in Houston, where the weathermen totally missed the call- they said a 20% chance of rain was likely.
- “The improvements and defenses against that 1976 storm were what failed during Allison in 2001, 25 years later.”
While the accuracy of predictions has improved, re-buliding on flood plains has substantial risk of repetition.
So do we bow to the inevitable …
Climate change is increasing frequency and severity. At some point, re-building in some areas could become financially impossible, and we will face re-location as the only alternative.
But lets look carefully at the future. The Republic of the Marshall Islands (RMI), just on the over the dateline and 5-7 degrees north of the equator, is a case study in progress.
Three years ago, I penned a post on climate change in that region. It was somewhat hopeful. However, more storms and a rising ocean were making re-location out of the territory a necessary option.
Late last year, The Guardian did a feature on the impact of climate change in the RMI. The high level overview was not pretty: “This Micronesian country of coral atolls faces worsening droughts, tropical storms, coral bleaching, coastal inundation and flooding – all exacerbated by rising temperatures and sea levels.”
The USA signed an agreement with the RMI which allowed visa-free migration to selected areas of the US. As a result, there was a ‘mass migration’, representing one fifth to one third of the RMI inhabitants.
… Or embrace the hope
However, according to the Guardian, there has been a mini-reversal, with young, educated Marshallese, “choosing to return after years living abroad, drawn back by the desire to help their homeland confront its challenges.”
The president of the RMI, Hilda Heine, is setting an example with her own commitment. She was the first Marshallese to earn a PhD. and is the first female leader of Pacific Island Nation.
There are ambitious projects underway to reduce the impact of sea warming and rising, such as production of desalinization water purification units and improved building strategies to reduce reduce erosion.
For the RMI, the biggest factor going forward is hope on two fronts: that climate change can be stayed and reduced by individual and corporate decisions; and that leaders provide new technologies and strategies to mitigate negative impacts.
What do you think?