Global Warming and Insurance Costs

An essay for the State of the Climate Report 1998 by Stanley A. Changnon, University of Illinois professor of atmospheric sciences and geography, analyzes insurance and the weather. A recent study he participated in “performed an extensive analysis of temporal fluctuations in severe weather conditions based on two insurance data sets, one for crop insurance and one for property insurance.”

The study found that though there are large regional fluctuations in crop-hail losses,
“No statistically significant long-term trend of decrease or increase in [national] crop-hail loss costs exists.” For weather-caused insured property losses the study found that the increased weather-related losses that have occurred since 1950 “were directly related to population growth.” Other studies have confirmed this result.

The principal finding of the study “was that population (reflecting the changing property target and increasing and increasing sensitivity to damaging storms), frequency and intensity of extra-tropical storms, and annual temperatures explained 98 percent of the historical fluctuations in catastrophes.” Population growth alone accounts for 85 percent of increase in weather-related losses.